How to Handle Credit Card Debt Problems
Are you deep in credit card debt? It’s okay, you’re not alone. Breathe, take a second, and let’s assess your situation realistically. Read what exactly need to do if you have credit card debt problems.
Credit card debt affects millions of Americans. The high-interest rates, the revolving nature of credit card debt, and the ease of using credit cards lead people into a financial trap. What’s worse is that most people are completely misinformed about how to correctly use credit cards.
Not to mention, unusual things hurt your credit score more than almost any other kind of debt! Aside from the past due to debt, items in default, and collections items, credit card debt damages your credit score.
Worst of all, it’s so easy to get into credit card debt. But it’s hard to get out. Paying off credit card debt is one of the most popular New Year’s resolutions and the benefits of paying off your credit card debt are enormous.
Maybe you want to pay off your credit card debt but are crippled by the interest rates, the enormous balances, and the high minimum payments. The Credit Pros are here to help you out.
What Tools Are Available To Those Deep in Credit Card Debt?
People deep in credit card debt are not without resources.
The main things available to credit holders are balance transfers and debt consolidation.
Balance transfers are offered by banks, and they allow you to take your credit card balance and put it on a different card or loan with a lower interest rate. Often, these rates are 0% for the first 6-12 months! That could be enormously helpful.
Balance transfers require a fee, usually a small percentage of the total balance, to transfer the balances. These fees are almost always worth it, though.
Debt consolidation is offered by private lenders and is somewhat of a riskier solution. Debt consolidation pays you out with a loan with a fixed interest rate and payment period. You can use this loan to pay off other loans with higher interest rates. However, you better be able to afford this loan and use it responsibly! Otherwise, it could quickly go into default.
I’m Deep in Credit Card Debt & I Can Pay More Than The Minimum.
Solution: Get a balance transfer and pay off the debt as much as you can.
Balance transfers allow you to move your debt to a lower interest rate card or loan. That way, you can put a bigger dent in the principle.
Pay as much as you can afford. Your goal is to erase the total balance of your credit card debt, and this may take a long time. But if you’re able to pay down more of the principal and pay less in interest, you’ll lower your overall burden.
I’m Deep in Credit Card Debt & I Can Only Pay The Minimum.
Solution: Get a balance transfer and pay the minimum.
Similar to the last situation, what you want to do is transfer your credit card balances to a lower interest rate environment. If you’re only paying the minimum, likely, you’re mostly (or only) paying interest. That’s not a good position to be in.
If you can pay even a little bit more of the principal, you’ll be in a better position.
In the meantime, you’re going to want to increase the amount you can pay. Reduce expenses where you can so that you can put more of your funds toward your credit card debt. This will pay off in spades later when your credit score shoots up!
I’m Deep in Credit Card Debt & I Can’t Even Pay The Minimum.
Solution: Consolidate your credit card balances and settle on a lower interest rate and a payment you can afford.
A balance transfer might help you out if you can’t pay the minimum payments. That is the safer, less risky option, and you should talk to your bank to see if you can get on a repayment plan at a lower interest rate and payment.
However, you may have a better time working with a debt consolidation company. They can give you a loan for which the payments and interest rates are fixed. So long as you make your payments on time, you won’t have to worry about your debt spiraling out of control.
I’m Considering Bankruptcy Because of my Credit Card Debt, Should I Do It?
Almost certainly not. There’s no use going bankrupt over $20,000 of credit card debt.
Instead, spend more time and energy learning to be more financially responsible. Credit card debt IS manageable, even if you have high balances and low income. There are things, additionally, that you really shouldn’t do.
What Shouldn’t I Do To Pay My Credit Card Debt?
Use payday loans
The reason credit card debt is crippling is because of the interest rates, and payday loans have much higher interest rates while also being extremely predatory. Don’t use them to pay off credit card debt: the math simply doesn’t make sense.
Transfer your balances
to higher interest rate cards just because of their 0% APR initial rate. Unless you are positive you will pay off the cards within that time frame, you’ll end up wasting more money and keeping yourself trapped in the long run.
Open more credit cards
while paying off your debt. Unless you’re transferring the balances, having more credit cards while paying off your debt completely defeats the purpose of you paying off your debt!
Frequently Asked Questions
What happens when you don’t pay credit card debt?
You will be charged late penalties, your interest rate will rise, and lead to a low credit score. If you miss payments your card will freeze, your debt will be transferred to a collection agency. The debt collector will seize your assets.
Can a creditor take all the money from your bank account?
The creditor could obtain a bank account levy by getting a judgment against you from the court. Creditors cannot take money from your bank account.
Can the bank freeze your account without any notice?
It’s a big yes. If your bank receives an order from the court to freeze your account, it should be done immediately without notifying you.
Still don’t know what to do? Call The Credit Pros. We’ll help you resolve your situation with personalized advice for your situation. Call 800-411-3050 today!
