Nowadays, credit cards are no longer considered as status symbol for the elite. Ordinary employees possess one or more credit cards to avail of the financial privileges they offer.
On top of these, they feel free to go shopping without holding any cash with them which can get the attention of dubious persons around. What more, they can purchase anything they want on credit by taking advantage of the credit facilities set by the credit card suppliers. Nice arrangement, isn’t it?
Credit card providers would certainly give you these enticing privileges because they would benefit from them. The more members and cash accounts they have, the more they propel the growth of their business.
On the other hand, if you analyze your financial situation, you will come to realize one day that the more you make purchases on credit, the more you are bound to carry the heavy burden of paying your debts later on.
The problem becomes more complicated when the liability has created a wider magnitude due to accumulated interest charges, where it may become almost impossible to settle your account.
To avoid putting yourself in a tight and embarrassing situation, let us analyze the credit card system to know how the card suppliers manipulate the credit card holders:
- The credit card system allows you to issue payments on credit by simply showing your credit card.
- When you make purchases on credit thru your credit card, your cash account multiplies.
- You are bound to settle your account on a monthly basis and failure to do so would result in interest add-ons and penalties for late payment.
- If the credit card debt is not settled on time, it will create double interest charges which will continuously increase until they reach the level where it would no longer be possible to pay the whole amount.
- Credit card debts are charged higher interest rates compared to other financial debts. Therefore, you might be surprised that one day, they have gone so high beyond your expectation and your ability to pay them.
To solve this problem, credit card subscribers must practice utmost discipline in their spending habits and should have a thorough knowledge of interest rates calculation on their credit card debt record.
Furthermore, they must be aware of every entries recorded in their monthly statement of account. Reconciling your own record and the statement furnished by the supplier regularly would be a nice idea to make.
How to Eliminate and Avoid Credit Card Debt
With the economy at its worst many have accumulated huge amounts of debt. Many become unemployed and may look to make ends meet by using their credit cards. The next thing you know you receive your next bill statement and you are unable to pay even the minimum balance due.
The creditors begin to call but because you do not have the money to make a payment t you start to ignore the calls. Your debt continues to grow. Does this sound familiar? If so, here are some tips to help you eliminate credit card debt.
1. The first step in getting rid of credit card debt is very important
Never ignore the fact that you owe money. Doing this will not make your problems go away. As a matter of fact, doing this will make interest accrue making the amount you owe higher and higher. In addition, late fees will continue to pile up.
Make the initiative to call all of your creditors and express to them that you are unable to make the monthly payments on the credit card. Sometimes they will connect you to a financial advisor who will discuss ways they can lower the interest on your monthly payments or work out a payment plan so you will not have to pay as much at one time.
2. If you owe on more than one credit card, pay off the balance on the card with the lowest balance owed first
Doing so will give you the ability to put more money towards the credit cards with higher balances.
3. Stop spending
It is essential that you stop putting charges on your credit card. Continuing to spend will only make your credit card debt worse. Remember, spending is what got you in debt in the first place.
4. Get rid of all unnecessary credit cards
Keep a minimum of two credit cards for emergency situations. The more cards you have the more tempting it will be to spend.
5. Use a debit card or a prepaid credit card to spend
With a debit card or prepaid card you are only able to spend the money you have placed in your account. This will help you to live within your means.
6. Never make the mistakes that many people make when managing credit card debt
Do not cancel a card that has a balance because some creditors will make your interest rate on the card higher, thus increasing your monthly payments. Cancel the credit card only when you have paid off the balance in full.
Eliminating credit card debt is possible. Following a system that works and sticking to it consistently is the stepping stone to getting rid of debt forever. Just remember that it is not wise to ignore the problem and avoid payments.