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  Category: Articles » Finance » Credit » Article
 

Credit Card Debt Problems




By Ethan Hunter

What to Do If You Hit the Debt Mire

When debt goes bad, it becomes more than just a financial
problem. It can take over your life. If you have a debt
problem the earlier it is handled and dealt with, the less
likely it'll turn into a crisis, and the more money you'll save
in the fullness of time.

The very nature of borrowing means that interest increases
over time and if it isn't dealt with promptly, it can spiral out
of control and land you into trouble. Particularly with credit
cards, when interest payments are large, and a minimum
payment offers a seemingly manageable solution; what is
actually happening is this: the balance is being eroded like
the sea bites away at the shore. It'll disappear into the
ocean eventually, but might take many years to do so.
What you need is a more radical approach, where chunks of
debt are eaten away each month.

Being in debt can be a stressful time. Many people are
scared to tell husbands, wives, friends - anyone. There's a
kind of stigma attached to the problem, but there is always
a way out.

Traditional debt advice proscribes borrowing your way out
of a problem. Yet this ignores the reality of most debts. A
more advisable and realistic approach would be to never
borrow more to get out of debt trouble. If it is possible to
borrow more cheaply elsewhere to replace existing
borrowing and consolidate your debt, then this is an
eminently sensible approach.

The first step should always be to work out your monthly
outgoings and try and trim down your spending on luxuries
and things you can do without. This doesn't mean you
have to live the life of a monk and forgo all worldly
pleasures! But by adopting sensible spending patterns you
can redirect some of your monthly income into paying off
your outstanding balances. Always keep at the front of
your mind the fact that the longer the debt smolders away,
the more you spend in interest payments.

Those with big debts may save thousands a year in interest
by reconsidering their borrowing commitments. Do this in
three ways:


i) Lower the interest if possible by moving your debts to
reduce the interest cost.


ii) Pay the worst first: prioritize paying off the highest
interest rate debts first


iii) Utilize any free debt advice there is. A non-commercial
agency will give you good advice, focus you on your
priorities, and place any problems in context. Things may
not be as bad as they first seem.



Of course, there's other basic, practicable things you can do
on your own. It's incredibly important to get on top of
credit card debts as soon as possible. Don't default or miss
payments. Let the credit card company know if you are
going to be unable to pay - it's always better to talk to
them than putting your head in the sand.

If things aren't that bad, there's a variety of easy strategies
you can implement that will help ease things for you.
Consider a credit card balance transfer to a lender offering
a lower rate of APR. This will mean you spend less on
interest payments each month and start to attack the
overall balance with real venom.

You could take out an unsecured loan as a way of
consolidating your debt. Personal loans can give you a
consistent cheap debt, and as you must make the
repayments each month, it helps provide structure to your
repayments. Those with poorer credit scores might not
always get decent rates, but it's still often a cheaper option
than paying back credit card debt each month, and overall a
faster method of repayment.

If you have them, use savings: The interest paid on
savings is usually far less than interest charged on
borrowing, so paying off debts with savings makes eminent
sense. Even if you think of your savings as an 'emergency
cash fund' or money for the future, better to fall back on it
in the short term and pay it back later, than paying interest
to a credit card company so that money for some far flung
eventuality is at your disposal.

It's worth mentioning that for many people, credit cards
provide sensible short term, flexible lending, that's both
cheap and convenient. You should always try and proceed
cautiously, but credit card debt woes are not an inevitable
consequence of taking them out. Tens of millions of
Americans use credit cards cheaply and conveniently every
year.

For those who feel they are in trouble, don't feel
stigmatized by your debt woes and don't pretend they're
not there. Help is at hand should you seek it, and a
solution is never far away.

 
 
About the Author
Ethan Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any type of credit issue please visit us at http://www.creditcardunlimited.com


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  Some other articles by Ethan Hunter
Credit Cards - The Basics
How Lenders Operate - And How They'll Make a Tidy Fortune from the Unknowing Credit card companies might seem like immensely clever, money making enterprises that exploit every loophole ...

Credit Card Lingo
Knowing What¡¯s Out There ¨C And What To Choose The World of finance can be a tricky game for both the ...

  
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