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In 2012, credit card debt in America amounted to more than $800 billion. This is the third largest debt category next to mortgage and student loans.
Borrowing money is not always a bad thing. When you are diligent in paying off your dues, you get to build up your credit score that will eventually help you get financial aid when you need it in the future. It only becomes bad and damaging when you borrow more than what you can afford to pay back.
That is what makes credit card debts a very popular sinkhole to get into. Most Americans keep on spending without thinking about how they will pay for their expenses. The appeal of getting products immediately and paying after is a tempting scenario for any shopper.
Credit card companies abuse this consumer trait by wooing card holders to keep on spending despite their inability to pay for the debt that their will acquire. They offer low interest rate schemes that will suddenly increase after the promo period. These companies get sweeter as they encourage spenders to use their cards on even the smallest purchase they make.
The Credit Card Debt Scenario
It is very easy to get into this kind of debt but you cannot always blame it irresponsible consumer spending. Sometimes, people don’t have a choice.
Imagine a family unable to pay their groceries in cash because the father lost his job in the recent recession. They will resort to paying for their expenses through these plastic cards. When there is a medical emergency and payday is still a week off, credit cards are used as a fallback. When the choice is between surviving and debt, most will obviously choose the latter.
What Not to do with Credit Card Debt
If you find yourself saddled with credit card bills, do not despair because there are programs and companies that exist to help you recover. You have a lot of options before you but more importantly, you need to be informed about your current situation. As important as it is to know what your next steps should be, you also need to find out what not to do with credit card debt.
First of all, do not resort to doing nothing. That is the worst you can do. This is not something that you can ignore because the interest rate will keep piling up the more you refuse to pay for your dues.
Another thing that you should not do – at least if you do not have to, is filing for bankruptcy. There are instances wherein declaring that you are broke is the only way out. However, that does not include escaping your debt obligations. When you say that you are bankrupt, it is true that the chances of your loans and other debts will be wiped clean – but there are several repercussions to that. For one, it will be very difficult to get financial aid in the future. You will either be declined or you will be given high interest rates for being such a high risk borrower. Either scenarios will not help you out of any tight situation. Try not to resort to this unless you really have to.
The last mistake that will make your financial standing worse is cutting off your credit card. Cancelling your account will not erase your dues. You will be unable to use your card anymore but that will not mean your debt will no longer grow. The interest on your credit card debt will just keep on piling unless you do something about your balance. Not to mention the fact that closing your account will lower your credit score.
If you want a way out of your mounting dues, you need the help of an expert. We encourage you to talk to us so we can plan your way out of this financial crisis. National Debt Relief specializes in debt settlement and we can help you aim for an easier payment term with your creditor.
