|
Credit Card Debt Facts You Need to Know
Relying on plastic to purchase the things we want when we simply don’t have the
cash is simple and convenient. Unfortunately, it has also led countless people
to spend too much and go into debt. If you currently owe money to a credit card
company, there are a few things you should know about this type of debt.
The minimum payment is not enough to get you out of credit card debt: The
minimum payment set by the credit card companies is typically barely enough to
cover the interest on your balance. The longer you take to pay back your debt,
the more the company makes. In some cases, it may take you 30 years to pay off
your debt. But for most people, the debt keeps growing - and they stay in debt
forever. Don't let this happen to you.
Balance transfers can be your friend: Many cards offer low introductory rates on
balance transfers, so you can consolidate all of your debt onto one card and pay
less interest. This is a good idea ONLY if you are disciplined and plan to be
aggressive in paying back your debt. You’ll might also want to destroy those
other cards - or at least hide them so you don't keep using them (sometimes
closing old accounts with no balance actually hurts your credit score).
Otherwise, all you might end up with is another debt to pay back if you start
using them again.
Your lender may be willing to help if you have crippling credit card debt: It’s
hard to believe, but credit card companies might be willing to work with you if
you’re having trouble making payments. They want to get all the money they can
from you, but if it’s between getting nothing (because you declared bankruptcy,
for instance) or accepting less interest, they’ll often choose the latter. You
may be able to lower your minimum payment, lower your interest (which means more
money will go towards paying off the balance), or both.
Credit card debt can wreak havoc on your credit score: Maxing out a credit card,
making a payment 30 days or more after it is due, or settling a debt for less
than you owe can substantially lower your score, which is important if you plan
to buy a house, purchase a car, or even apply for certain types of jobs. Of
course, if you have too much debt then credit (which means borrowing money)
isn't nearly as important as paying off your debt.
So if you're buried under a pile of credit card debt, take action - make a plan
and stick with it until you get where you want to be - debt free! |
