The Cost of Credit Card Debt

If one of your ancestors was an early settler in Georgia, you might not want to brag about it much. This is because Georgia started as a colony where England sent its debtors. So, if your great, great, great, great grandfather arrived in Georgia early on, you can almost bet he learned about the dangers of debt the hard way.

Of course, today the cost of credit card debt doesn’t include the threat of being thrown in the hold of a ship and sent off to some far away land. But the cost of credit card debt can still be severe.

Are you being harassed?

Are you receiving harassing phone calls at all hours of the evening where debt collectors are hollering at you and threatening dire consequences like having your wages garnisheed? Or maybe you can’t sleep nights worrying how you’re going pay your next month’s bills, including the minimum payments you’ll need to make on all those credit cards you’ve just about maxed out.

The emotional cost of credit card debt

If you’re carrying a lot of credit card debt, we don’t have to tell you what an emotional burden this can be. It can feel like you’re walking around every day carrying a 100-lb. backpack or you’re being crushed by a ginormous stack of bills. In fact, credit card debt can just suck all the fun out of life.

The financial cost of credit card debt

Credit card debt also comes with a financial cost beyond just the payments you’re fighting to make. Once you run up a lot of debt, you may not be able to get any new credit cards unless you’re willing to pay some outrageous interest rate. You may not be able to get any other kind of credit such as a loan unless you’re willing to put your house up as collateral or, again, pay an interest rate of 20%, 22% or even more. The higher the interest rate you’re forced to pay, the longer it will take you to pay off that card because so much of your monthly payment is going just to pay interest. For example, if you owe $15,000 on a card with 20% APR and make only the minimum payments, it would take you 18 years to pay if off. And the interest alone would cost you more than $10,500!

What to do about credit card debt

There are some good alternatives to making just minimum payments every month and keeping your fingers crossed that somehow things are going to get better. One solution is a debt consolidation loan. This is where you go to your bank or credit union and take out a loan big enough to pay off all your credit card debt. The advantage of a debt consolidation loan – besides the obvious one of getting those collection agencies off your back – is that you will get a much lower interest rate. In fact, you should be able to get a home equity line of credit or a second mortgage for 6% or less and have a monthly payment of around $300.

 Only one way to reduce your credit card debt

A problem with debt consolidation loans is that they do nothing to reduce your credit card debt. All you’re really doing is moving it from one lender (or lenders) to another. In comparison, there is a solution called debt relief that can actually reduce the amount you owe the credit card companies and get you lower monthly payments. The company National Debt Relief has years of experience negotiating with credit card companies to get debt reduced. In many cases, it has negotiated settlements of 50 cents on the dollar or a 50% reduction.

National Debt Relief has a website (https://www.nationaldebtrelief.com) where you can get a free debt analysis to see if the company could get your credit card debt reduced by 50% or more. The company charges no upfront fees; you pay only if it can negotiate a debt settlement plan you can live with – and that will get you out of debt in just 24 to 48 months.