Credit Card Debt

Understanding Credit Card Debt:
How to avoid it and How to pay it off.

Credit cards make it seem like you're not spending real money. And therein lies the problem. Credit cards have been around for awhile, but their use has greatly increased, along with the debt people carry on them. Using credit cards often leads to impulse spending and overspending, and those items that seemed like such good bargains end up costing you 10 to 20 percent more than you thought, due to credit card interest.

Credit cards are easy to get, are more convenient to use than having to write a check and you can use them almost anywhere. So what's the problem? There is no problem if you use your card wisely and pay back what you owe each month. Credit cards are great when used responsibly, but they can cause financial nightmares when they're used to buy things you can't afford. How does credit card debt happen? A little at a time!

You should absolutely be unwilling to pay only the minimum balance on your credit cards each month. If you cannot afford to pay more than the minimum payment each month then you definitely cannot afford to be charging anything period.

Once you get a credit card, it's easy to get more. Did you know that the average household receives eight credit card offers each month? Credit card companies are flooding us with card solicitations and as a result, consumers are sinking further into high-cost credit card debt.

Paying off your credit card bill in full and on time each month is the best way to go. If you can't, paying as much as you can, on time, is the next best plan.

The Cost of Credit
There are several types of costs associated with credit cards. Some cards charge an annual fee. The annual fee is a flat dollar amount the issuer charges each year for the use of the card. Other fees that you might incur include processing fees, charges for exceeding your credit limit, late-payment fees, balance transfer fees and fees on cash advances.

Did you know that for every $10 you charge, and then pay only the minimum payment as shown on your statement, it will cost you about $40 to $50. Were you aware that credit card companies are allowed by regulators to raise your rates for any reason, including no reason?

Taking Control Of Credit Card Debt

Credit card debt has become a major problem for many people. Unfortunately, it is not as easy to get out of credit card debt as it is to get in, but it is not impossible. The sooner you realize and admit that you're in over your head, the easier it will be to get out from under the burden of debt.

Warning signs of too much credit card debt

* You have more than two major credit cards and you make the minimum payments on them.
* You consolidate debts with a high-interest loan.
* You're at or near your credit limit on your credit cards.
* You use cash advances on your credit card to pay your bills.
* Your credit card has been declined when you tried to make a purchase or your application for credit has been denied.

The first step to paying down debt is to put the credit cards away, or better yet, cut them up. Then stop charging and start using cash or a debit card that takes money directly from your checking account. Then change your attitude and drop the behaviors that got you there in the first place and develop new ones that will keep you out.

The next step is to negotiate with the credit card companies to get a lower interest rate. If you've been a good customer and have been with the company awhile, you stand a good chance of getting your rate reduced. This is one of the reasons it's important to work with your creditors before you start making late payments or missing payments altogether.

Once you start getting black marks on your account, your lender is likely to raise your rate sharply to offset the risk that you might not repay your balance. On the other hand, lenders want you to pay your debts and are sometimes willing to lower your interest rate or waive fees if they believe you're serious about getting caught up. It doesn't hurt to ask.

Talk to the creditors you can't pay fully and let them know you intend to meet your obligations but need some time. They may be willing to give you a month or two and tack the payments onto the end of your loan, reduce your interest rate or reage your account so it's not reported as delinquent to the credit bureaus.

Money Management

Debt Management

Personal Finances

Overuse of credit cards is the biggest deterrent to reaching your financial goals.

Credit Card Debt

Taking Control Of Credit Card Debt