The Worst Kind of Debt is From Credit Cards
As you leave college life behind, you’re probably carrying a lot more around with you than just a shiny new diploma. If you’re like most college grads, you’re carrying the burden of credit card debt—lots of it. In fact, the average college graduate leaves school with over $2,000 in credit card debt.
Sure, some of it might still be from the spring break trip your junior year, but most of it was probably racked up from school-related costs such as textbooks, school supplies, and food. No matter, debt is debt, and the worst kind of debt is from credit cards. You need to debt consolidation. We know funds are tight, but by setting yourself up a payment plan, you too can quickly eliminate credit card debt.
Do more than just the minimum
With interest rates on credit card balances ranging as high as 18 to 23 percent, credit card companies would love for you just to pay the minimum amount every month. If you do this, the interest keeps compounding, and the credit card company keeps getting fatter as your debt rises. Put them on a diet; pay at least double the minimum every month on your balance. In a crunch? Who isn’t? Cut out a few of life’s everyday luxuries and you’ll find yourself with the extra cash to put towards your balance.
Bait and Switch
Credit card companies love to send out promotional offers for cards touting low or no interest balance transfers for a set amount of time. Don’t be so quick to toss them. With a little crafty maneuvering, you can make them work to your advantage. If you have one or more cards with balances incurring a high monthly interest rate, consider moving these balances over to this new low rate. It can save you a ton of money. But beware, most of these cards can hit hard after the promotional period ends, with rates that may be higher than what you’re paying now. But if you think you can pay off the balance within the promotion time, make the switch.
Sacrifice your savings
Sure, it sounds horrible, but draining your savings account is a great way to get out of debt. Put it this way: the miniscule amount of interest you’re getting from your savings account is nothing compared to what you’re paying in credit card interest. If only you could get an 18 percent return on your money! Pay that balance off in full, and it’ll save you big in the long run.
Get down and grovel
If times get really tough, consider asking for help from your family. It’s hard to say no to a family member, and you’ll probably get a pretty reasonable interest rate from them, as well. Just don’t go to the well too many times; you don’t want to be known as the freeloading relative. Be professional about asking for a loan, even suggesting a written agreement to show your family member how serious you are about paying them back.
Drop the “B-Word” on creditors
If you still can’t seem to make your payments, call your credit card companies and have a financial heart-to-heart with them. Tell them that your back is against the wall financially and you’re going to have to declare bankruptcy unless you can work out a plan with them. Credit card companies’ least favorite word is bankruptcy. If you go that route, they don’t get paid. They have no choice but to work with you. Ask for a lower interest rate and a slower repayment plan. While they’ll do everything they can to help, remember, you got yourself into this mess, you need to get yourself out.
Paid off? Stay that way
So you’ve begged and borrowed and somehow got your credit cards paid off. Now the challenge is to stay that way. First, rid yourself of surplus cards. You should only have one, two tops. Close out the rest of those accounts as soon as you get them paid off. You’ll be less tempted to use them, and fewer cards are easier to keep track of. The next step: stop using credit cards all together. Leave them at home, cut them up if you have to, but don’t use a credit card unless it’s an absolute emergency.
How can a credit card debt elimination program help you?
When you ask people how they plan to improve their lives, they will often answer you that they would first get rid of their debts. Debts are undesirable. Despite today’s promotion of the culture of credit cards, many people still know the fact that shopping with a credit card is not buying; it is merely borrowing. This is the reason why credit card debt elimination programs are much sought after these days.
Well, when you are in a credit card debt elimination program, you will have a much clearer view of your objective and how to reach it. The problem that most people face with debt elimination is the fact that they do not know where or how to begin. A credit card debt elimination program can help you focus your efforts and make sure that you reach your goal of total debt elimination as quickly and as easily as possible.
There are different types of credit card debt elimination programs. Some of these are:
Self- help - This type of credit card debt elimination program makes use of your own resources to get rid of your debts. This type of credit card debt elimination program often consists of a special schedule of payment which, when followed, will let you pay your debts off in the fastest time.
A person is actually capable of making this type of credit card debt elimination program on his or her own. However, some people just do not have the time or the expertise to put a credit card debt elimination program like this together. They often consult professionals in order to help them with this.
One advantage with this type of credit card debt elimination program is the fact that it costs the least to put together. As said before, most people can do this alone. This means that consultancy fees of experts may be minimal. However, the disadvantage of this type of credit card debt elimination program is that it takes a longer time and a lot of discipline to follow it through.
Negotiation - A common credit card debt elimination program used by people is to negotiate with their creditors to forma a payment plan which can be easier on them. Often, a person will sit down together with an advisor and his or her creditors to analyze the debts of the person and try to consolidate them into a single debt which would be much easier to pay on the part of the client.
The advantage to this type of credit card debt elimination program is the fact that a person will find it easier to pay off his or her debts. This means that the debts will be paid much faster. Sometimes, the negotiation makes way for a lower interest rate and service charge. This means that a person will also have a lower debt to pay.
However, the disadvantage to this credit card debt elimination program is the fact that it requires an expert to set it up. A professional needs to exert all effort make use of different connections and different skills just to get the creditors to agree to a compromise. This means that the consultation fee will be high and this may just add to one’s list of debts.