Your debt is a result of a lot of mistakes – mostly on your part. You can point a finger at the government or your family for getting you in your credit troubles but the fact is, you let it happen. You allowed yourself to be coaxed into using your credit card to purchase unnecessary things.
One of the things that you have to learn is to pay credit cards by your own rules. We have a lot of misconceptions about debt payment and sometimes, these end up not helping us at all. We think that we are getting by and while there may be some truth to that, we fail to realize that there is oftentimes a better way.
On top of these misconceptions is something that creditors will encourage you to do – pay only the minimum as indicated in your billing statement. This should never be followed by any consumer. Paying the minimum will get you stuck in your debt for literally the rest of your life. Always pay as much as you can over the minimum.
Another important matter that you have to be vigilant about is your interest rate. These rates constantly change. Although the government placed strict regulations to cap these changes, it can get really confusing. Credit card interest rates can be anywhere from 0% to 32%. It does not have a fixed term. And here’s the expose about it, the more people defaulting on their payments, the more motivation the credit company has to increase your rate so they can cover their losses.
Scrutinize your credit card statements and see if your account has a fixed APR (annual percentage rate) or a variable. The latter means the APR will change depending on a standard index. Know what this all means and don’t hesitate to ask the customer support of your credit card company if you have questions.
You should also take heed if your credit card company offers you a higher credit limit. Some people make the wrong assumption that if it was offered, they can always afford to pay off that limit. Even if that is true at present, that does not mean you should buy everything in sight to get it. Offering you a high interest rate is their way of encouraging you to buy more and thus put yourself in debt. Remember, the longer you stay in debt with them, the higher interest rate you will end up paying. That interest is their profit. They will do everything in their power to make sure they get the most interest payment out of your pocket.
One thing’s for certain, credit card debt must be paid off as quickly as you can. If you don’t want to close your account for fear of lowering your credit score, then make sure you know how to minimize your payments. Come up with a debt payment plan or enroll in a well researched debt relief program. You have various options – debt consolidation being the best choice if you want your credit score to stay unaffected. Find out how debt consolidation can effectively get you out of your credit card problems and into a debt free life.