Credit Card Debt Relief Help
Credit card debt can be tough to get out of. Interest rates on credit card are typically very high. This means that, if you don’t pay off your balance in full each month, you’ll end up paying significantly more for everything you’ve purchased on the card. This is especially true if you’re only making the minimum payments. Many people feel like they’re doing okay as long as they can make the minimum payment each month. They’re keeping the credit card company happy ( as the interest charges keep piling up)and creditors and bill collectors aren’t coming after them. However, just because the credit card company is happy, that doesn’t mean that you’re not putting yourself in financial trouble.
Obstacles to Credit Card Debt Relief
If you’re only making the minimum payment each month, you’re throwing most of your money at interest. It will take you years before you start decreasing the actual amount that you owe and many more years after that until your card is paid off. In that time, you’ll spend a lot of money on interest.
For example, if you owe $2500 on a credit card with an 18% interest rate and you pay back only $100 each month, it will take you almost 9 years to pay off the balance! Plus, you’ll end up paying more than $3800 over the course of those nine years! That means you’ll lose $1300 in interest! Wouldn’t you rather have an extra $1300?
Plus, while your credit card company won’t get upset with you for only paying the minimum, the credit bureaus won’t necessarily be as optimistic. This is because a portion of your credit score is determined by how much debt you have. Owing a lot on your credit cards, even if you make payments every month, can hurt you credit score and make it more difficult to get loans in the future. This can put you in a situation where you’ll be likely to accumulate more debt on your credit card. After all, if you’re not able to get other types of loans, you may lean more heavily on your credit cards and use those more often, putting yourself even deeper in debt.
Over time, if you keep using your credit cards and only paying the minimum payments, you’ll find that your overall amount owing grows. It’s easy to see how this happens. If you’re only paying back $100 each month, but you’re charging $500 on your credit card every month, the overall amount you owe is going to increase. Not only does this hurt your credit rating, but it will also raise your minimum payment. The minimum amount that a credit card company wants you to pay back is a percentage of the total amount owing. As the total amount owing goes up, so does your minimum payment. This minimum amount might eventually get too large for you to pay back each month. And that’s when creditors start calling.
Finding Credit Card Debt Relief
If you’re in financial trouble and looking for credit card debt relief, there are a few options available to you. The first is to work out a plan to see if you can afford to raise your credit card debt payments at all. While paying off your balance in full is ideal, paying anything more than the minimum is better than just paying the minimum.
Work out a budget and see which expenses you can cut. If you cut out spending $5 a day on coffee, cigarettes or snacks, that’s $150 a month that you can use to repay your credit card debt. This can help you get out of debt.
You’ll also want to avoid adding any addition debt onto your cards. Cut out expenses if possible and put less on your credit cards. For example, if you can reduce your food budget by $50/month and still have enough healthy food to eat, that’s $50 less that you’re putting on your credit card every month.
If you’re stretched too thin and have too much debt, there may not be anywhere where you can cut expenses. You might be spending all of your money on necessities like rent/mortgage payments, utilities, groceries and other vital expenses. This means that you may need help from a financial professional in order to find credit card debt relief.
A trustee in bankruptcy is a person who is trained and licensed by the federal government to review the financial situations of individuals and inform them of the options available. Speaking with a trustee in bankruptcy can be a good start. He or she can help you decide what steps you should take in order to find credit card debt relief.