Credit Card Debt - Consumer Credit Card Relief
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Credit Card Debt

Credit Card Debt

Facts on Credit Card Debts

It may be somewhat of a surprise to know that America’s average credit card debt has mounted to over $1 trillion by 2018.  Distributed among 126 million households, this number represents roughly 27% of the total American consumer debt. In response to this overwhelming reality, there are many credit card debt relief programs available to consumers whose goal is to be debt free.

Another interesting stat provided by the National Debt Relief Organization states that individuals with credit card debt have an average balance of over $3,000.  This number increases drastically for American households with credit card debt to more than $8,000. What is more, the average American household debt, including credit card debt, is almost at a whopping $16,000.

Interest rates further compound the debt scenario.  On average, people with household debts of the above-mentioned size, are paying nearly $1000 in interest every year.  In other words, a significant amount of household debt payments are not significantly lowering the principal on the statement balance, but are paying for interest and fees annually.

IT’S OKAY TO BORROW MONEY

Sometimes, borrowing money can be a good thing.  One of the advantages of having credit card debt is getting to build up your credit score.  However, this happens when you are diligent in making payments on time. Building up your credit score will, in turn, allow you to be approved for higher credit limits at lower interest rates.  You might need it in the future, especially for buying a home or a car, or any big item. When you have several outstanding credit card balances and still have a high credit score because you have been paying on time, credit card debt consolidation may be feasible at a lower interest rate.

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average credit card debt in america

Bar graphs showing average credit card debt vs Household net worth, courtesy of value penguin.

However, credit card debt can be very damaging as well.  If you borrow more than what you can afford to pay back and your monthly payments don’t bring your balance to zero or 30% and lower than your credit limit on the credit card monthly bill, you might be heading for credit card debt relief. Being a sensible credit card user is, therefore, the way to a better future.  After all, no one wants to carry a wad of cash on hand. Convenience in payment is not the only reason to use a credit card. Purchasing big items, such as TVs and furniture, is possible by using a credit card in cases when there may not be enough cash in the bank account, or you are caught between paychecks.

Resolving emergency situations constitutes another useful way of using credit cards. In such cases, credit cards are tools that can make a difference in someone’s life.   Credit cards also offer you the opportunity to track your expenses more closely and budget your life according to your means. In addition, when you lose your credit card, it’s not like misplacing a wallet full of cash.  With a simple, promptly made phone call to the credit card issuer your card will be blocked and you won’t have further financial responsibility or lose any money. Likewise, when identity theft occurs, you can see the unusual activity on your credit card, if you are in the good habit of checking it, and by contacting your credit card company, this too will be resolved without any financial responsibility on your part.  In most cases, the most you will pay in case of identity theft or a missing credit card is a $50 fee.

THE SINKHOLE OF CREDIT CARD DEBT

Just as credit cards are convenient to use, they are also easy to abuse. There is only a thin line between the two.  This makes credit cards out to be like black holes. Once you have an available credit limit, it may be too tempting to hold back. After all, our society appeals to instant gratification tools such as credit cards.  People want what they want, and they want it now! Besides, you don’t have to pay at the time, and this tempting scenario gets many people charging items to their credit card and incrementing their credit card debt beyond their ability to pay off the balance each month.  Alternatively, worse yet, when laid off, or when emergencies occur, people abuse credit cards knowingly due to unexpected circumstances from which they may not be able to recover in a timely manner.

Additionally, credit card companies actively pursue and do a great job of persuading credit card users to continue scaling their credit card spending whether they can afford it or not.   One of the best credit card strategies to attract new users is offering an amazing 0% interest balance transfer card. Flocking towards this appealing lure, it is easy to increment credit card debt.  But many are unable to pay the skyrocketing interest rate once the 0% rate period disappears leaving a hefty balance to be paid at an ultra-high interest rate.

Other strategically planned credit card propoundments come in the form of reward points, airline miles, and cash-back rewards for using credit cards in your daily life.  Before getting excited about these offers, it is recommended that credit card users read the small print and do the math. A classic example of this is when you fall for the 2% cash back reward gimmick which is not more than 2 cents per dollar.  Realistically speaking, you’d have to spend $1000 to earn $20. So far so good, but how about the interest on the $1000? If you are paying 15% interest, for example, then the $20 earnings will be nullified.

what you shouldn’t do with credit card debt

First of all, your credit card debt won’t solve itself, so don’t just sit back there and do nothing about it. If you ignore the credit card bills, guess what? The bills interests will compound and while you’re doing nothing about it, you’ll be sinking deeper into debt. And if you ignore the bills long enough, you could owe a lot more in interests than the amount you borrowed. Second, don’t file for bankruptcy. While filing for bankruptcy will relieve you of a few obligations, it will make things very difficult for you in future. Once you file for bankruptcy, many credit facilities will see you as a high risk. They will either decline your requests for credit or hit your loans with very high interest rates. So here’s somewhere to start; find a credit card debt relief establishment and find out the best plan to help you out of the mess fast.

Keep the cards open

The last thing you want to do when the credit card debts overwhelm you is to close the cards, especially the credit cards you have used for many years. Here’s why; a whopping 30% of your credit card score depends on your debt to credit ratio. This is basically a ratio of your credit utilization to your total limits.  If you close the cards, you’ll have a very high debt to credit ratio which means you’ll stand higher chances of your credit requests being declined than if you keep your cards open.

CREDIT CARD DEBT RELIEF

Not all credit card debt is a consequence of fickle consumer overspending.  Sometimes, when people don’t have another alternative, families are caught between a rock and a hard place having to pay for basic needs like food and medicine in situations beyond their control.  It may be due to a crunch that arises in between paychecks, or due to recessionary measures at the workplace. In such cases, many people resort to credit card debt in order to resolve a survival situation and overcome difficulties at a given time.

Whatever the case, taking responsibility for your credit card debt situation is the first step to recovery.  There are many credit card relief options available for consumers who make it their priority to be debt free. Credit card debt consolidation is one such alternative that may work in your favor.  It consists in acquiring a new debt that will allow you to pay off the rest. The trick is being able to secure a low enough interest rate for this option to be viable and affordable. In many cases, equity loans based on asset worthiness are approved at the lowest rates.  Research your options and do the math, first and foremost. Credit card debt consolidation is a debt relief option that can help you manifest a debt-free reality.

How do debt relief programs affect your credit score?

Debt relief programs will help you device an appropriate plan to get through frustrating credit card debt repayments schedules conveniently. In the end you can only choose between two options; filing for bankruptcy or settling the debt. Either choice will have serious implications on your credit scores. A good credit counsellor will help you come up with a settlement plan that will get you back on track with your loan payments; a path which will improve your credit scores over time. It will also help revive your accounts to a current status and consequently improve both your credit standing and credit scores. Always be sure to go for an option which will help you become financially stable fast.

CONSOLIDATING CREDIT CARD DEBT

This relief works just like taking out a new loan as was explained above; the important thing to note is to ensure that the interest rate on the loan is lower than that of repaying the credit debt. It would be pointless to end up spending a lot more in credit card debt interest when settling your credit card debt than the amount you are paying the credit debt itself. Avoid making more credit purchases once you secure a consolidation loan, otherwise your efforts to settle the credit debt would be futile.

Credit card balance transfers

You can have credit debts across several credit cards; instead of keeping track of these credit debts separately, you can transfer the debts to one card. Most credit card companies offer a 0% interest when you transfer your debts to one card–there are a few that offer low percentage interest rates. This is to encourage debtors to transfer their credit card debts to a single credit card for easy debt management.

debt consolidation loans

Debt consolidations loans enable you to consolidate multiple debts into one loan for easier and more convenient repayment. Debts consolidation services are advantageous because ultimately, they lower the interest on loans. On a few instances they may prove to be more costly when compared to normal repayment of your multiple credit debts. This is often the case when the repayment period is prolonged. Just be sure to check on the loan terms and compare the costs accumulated in interests when you repay each credit can loan independently with when you consolidate the debt.

How do I pay off my credit card debt?

Paying off your credit card debt can be more challenging than paying off any other debt; it helps if you have a plan. Here are a few useful tips to help you go about credit card loan repayment stress-free.

  1. Keep track of your credit card debts

You can keep track of the credit debts by organizing them in a simple and manageable manner; staring with the debt with the highest interest rate to the debt with the lowest, it’s called debt stacking. Another effective method is snowballing. It’s opposite of Debt stacking whereby you pay off debts starting from the ones with the smallest interest to the highest. Keeping track of your credit card debts helps you plan your expenditures accordingly in order to make room for the repayment of your credit debt.

  1. Communicate with your Credit Facility

Your credit facility is there to ensure that your debt repayment goes through smoothly and efficiently. It’s always a good idea that you be on the same page as your credit facility as far as your debt repayment is concerned. You can call or visit their premise to explain your financial situation to them. They may vary your repayment plan by lowering your interest rate; they may waive any late fee charges or even prolong your repayment term at no extra cost. They may also consider factors such as you being a long term client.

At the end of the day, your achievement should be getting your credit facility to vary their terms to specifically suit you so that you can settle your credit debt conveniently.

  1. Seek for Help with Credit Card Debt

The more you owe the more challenging it is to repay your credit card debts. Fortunately, we are willing to help you with credit card relief and debt management services tailored to help you repay your credit card debt efficiently and conveniently. All you need to do is reach out, seek for help and we guarantee you will find it.

When it comes to credit card debt repayment, even the best economist needs a sound plan. Use credit card debt relief services to manage and monitor your finances, expenditure and earnings. This way you will be able to enter into credit card debts that are manageable and easy to repay.