| Credit Card Debt-Is It Easy To Get Out Of It? |
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| Written by Chandrasekaran Rajamani |
| Thursday, 21 October 2010 20:42 |
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The problem with credit card debt is that it is unsecured debt hence has higher interest rates(up to 36% per year) compared to secured debts. Normally credit cards are used for buying almost anything and if you do not pay the whole borrowed amount within the stipulated grace period(normally 25 days) after the credit card bill is issued , high rate of interest is charged. This keeps adding up due to the cumulative effect which over a period of time can get you into heavy debt. If you do not have control over your spending habits and if you are not regular in repayment of credit card bills, you may soon find yourself facing the problem of credit card debt. Due to the ease of use, credit cards have become a necessity rather than a luxury. Almost every one has at least one credit card and many have more than two.
The problem with credit card debt is that it is unsecured debt hence has higher interest rates(up to 36% per year) compared to secured debts. Normally credit cards are used for buying almost anything and if you do not pay the whole borrowed amount within the stipulated grace period(normally 25 days) after the credit card bill is issued , high rate of interest is charged. This keeps adding up due to the cumulative effect which over a period of time can get you into heavy debt. If you do not have control over your spending habits and if you are not regular in repayment of credit card bills, you may soon find yourself facing the problem of credit card debt. Due to the ease of use, credit cards have become a necessity rather than a luxury. Almost every one has at least one credit card and many have more than two. There are certain steps you must take if you want to get out of credit card debt. These are time tested tips which many have used successfully. You must be ready to take certain difficult steps for the difficult situation of credit card debt. If you find yourself in such a situation, do not lose heart . Stop blaming yourself for the situation you are in but concentrate on how to solve it. This problem can be overcome with firm determination and planning. The main thing is to have control on your spending. This problem is not unique to you alone and many have been successful in defeating debt . If others can do, you too can be successful and never allow this problem to defeat you. But you must remember that these steps are difficult to take and need will power. The most important step is your determination and willingness to solve this problem. Keep repeating to yourself that you can successfully solve this problem. You must develop ample self confidence and will power to cope with this issue. Get a new debit card tied to your bank account . This way you can not spend more than what you have in your account. This is the most difficult step especially if you are addicted to shopping but is the most important step to your road to success. If you can achieve this you have almost won the battle against credit card debt. Take stock of the situation by calculating the total amount of credit card debt on all the credit cards you have. Once you arrive at this figure, you will know the real position you are in. When you do this calculation, do not forget to take into account the reward points earned on individual cards. Make a realistic plan which you can afford for getting out of credit card debt. Start paying more than the minimum amount of your credit card bill every month and within a year you will find that your credit card debt has decreased considerably. For instance suppose you have a credit card debt of $1000,you are required to pay the minimum amount of 2% which amounts to $20 dollars per month. If you keep paying this minimum amount of $20, it will take about 13 years for you to pay back $1000 with interest if you do not add to the debt by making use of the card. But if you increase the monthly amount by $10 and make it $30, the debt amount of $1000 can be paid back within 34 months provided you do not increase the principal amount. This shows how increase in monthly bill payments can reduce your debt considerably. Another important point to remember is that if you pay your credit card bills before the bill closing date or before the start of grace period (which is 20 to 25 days after the bill closing date) you save considerably on the interest charges. Paying just before the due date at the end of the grace period can cost you considerably more in interest charges which may be almost double . DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. If you want to learn how to eliminate credit card debt easily,visit the site for the best credit card debt advice for your needs. |