Is Your Credit Card Debt Ruining you?
Credit Card Debt: Buyer Beware
A credit card can be a valuable financial tool if used wisely. It offers an easy way to make purchases, help you establish a credit history, and serve as a source of funds in the event of an emergency. Many credit cards also offer bonuses that reward their customers, but sometimes these cards cost more than the rewards are worth. How can you be sure you won't end up paying more in interest on revolving balances than the value of the rewards? Here's some tips...
The Point Of No Return
The average American routinely overspends (whether by habit or misfortune). If this sounds like you, chances are you can't pay off your credit card balances monthly. That means making the minimum monthly payments or transferring balances between cards to consolidate debt and reduce interest rates.
Does this describe your situation? If so, you are at a dangerous point financially. Once you are struggling to make the minimum payments (which are, by nature, designed to maximize interest paid to the credit card company by requiring repayment over many decades), and you are approaching the maximum limit on your credit cards, you are stretching your budget too thin and risking financial ruin. This is a treacherous point.
Getting Back On Track
Luckily, there are a myriad of organizations and agencies dedicated to helping you consolidate (or partially forgive) balances, lower interest rates and establish regular payment schedules to help you pay down your credit card debt.
If you go the way of a credit relief agency, you need to understand that it will be reported to the credit bureaus. While this isn't as bad as bankruptcy, you usually won't be able to get new lines of credit while you're in a credit counseling or credit relief program.
That's not necessarily a bad thing, however! Not getting new credit and not charging to the cards you have means paying cash - and that means living with your means. It's a good way to get back on track.
Credit Cards Aren't Necessarily Evil
Like most things in life, you need to consider both the pros and cons of credit cards before deciding whether or not you should steer clear of them. If you can spend responsibly and pay off your balances, credit cards can be a good way to maximize spending power and establish a credit history.
If, on the other hand, you are prone to overspending, then credit cards are a means by which you will rack up debt that you will be unable to pay off. They may seem like an easy way to buy what you want and need, but buyer beware!
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