Monday, August 8, 2022

How To End Credit Card Debt

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Consider Nonprofit Credit Counseling Or Financial Assistance

Year-end money: How to get control over credit card debt

Credit counseling agencies do a lot more than just create debt management plans. If you’re having a hard time making heads or tails of your debt situation, a .

For example, they can review your debt situation, help you create a budget, explain your options, review your credit report with you and also provide some educational courses. Many agencies do all of this for free.

If your financial situation is dire, you may also consider seeking financial assistance. This may come in the form of rent relief, food stamps, legal aid and other assistance programs from federal and state agencies, as well as nonprofit organizations. You can use the 211 network to find programs in your area.

Using A Credit Card To Pay Medical Bills

Medical bills can be overwhelmingly expensive, especially if you’re uninsured. If you’re having trouble paying your medical bills, negotiate an agreement with the hospital or other company to whom you owe money. Don’t add to your bills and stress by adding exorbitant credit card interest rates onto them. You should also go through your medical bills a second or third time, making sure they are accurate and you understand all the charges.

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If you are struggling to make your monthly credit card payment, or cant catch up with your past-due payments, we may have solutions for you. The sooner you contact us, the sooner we can determine what help may be available. We will review the nature of your hardship and your financial information to determine what payment solutions you may qualify for.

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How To End Credit Card Debt

Is credit card debt piling up? Are you feeling totally overwhelmed and think there is no way out? I can tell you I have been in your shoes and know how you feel! But, TRUST me, there is a way out and you CAN do it. But you have to start now. It will only be harder if you keep waiting to do something about it. Keep reading!

Credit Card debit it one of those things that once it gets started, it quickly and easily spirals out of control. Its amazing to me how quickly it can add up! There are lots of different reasons people get into credit card debt. Some reasons are pretty legitimate like medical emergencies or losing a job that can cause you to get into credit card debt. BUT lets be real. MOST people get into credit card debt because of overspending beyond their means. Could it be you arent paying attention to your money each month or dont even have a budget? If thats so PLEASE read this first How to Create and Stick to a Budget.

There is NO WAY you can get out of credit card debt if you continue to spend beyond your means every single month. So if that is you, do not read any further until you have that under control. If you need ways to save money each month to put toward your credit card debt, here are some more great posts about saving money that will make a REAL difference:

Option : Debt Management Program

10 Steps to Stop Using Credit Cards and Get out of Debt ...

If you have too much debt to pay off on your own or a low credit score, you may need help reaching debt-free status. In this case, you can contact a agency that comes in and works on your behalf. They help you work out a repayment plan that works for your budget. Then they contact your creditors to arrange for lower interest rates.

You can qualify for a debt management program regardless of your credit score. You make one payment to the agency and they distribute the payment to your creditors as agreed. Its like an assisted form of debt consolidation without a loan.

Here are a few examples of the results you can see with a debt management program:

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Try A Balance Transfer Credit Card

If monthly interest charges are the only obstacle preventing you from paying off your credit card debt, its time to apply for a balance transfer credit card. The balance transfer process allows you to consolidate your existing credit card debts onto a single card, often with an introductory zero percent APR period that allows you to pay off your balances without paying interest. The best balance transfer credit cards offer intro APR periods that last between 15 and 18 months.

The balance transfer process is one of the easiest ways to get rid of credit card debtsand if you manage your balance transfer card responsibly, it can even help you boost your credit score.

Build An Emergency Fund

Many of us know how to budget for lifes everyday expensesits the unexpected expenses that throw us for a loop. Try setting aside a little money every month and building an emergency fund. That way, you wont have to go into debt to cover an expense you werent prepared for. Even an extra $500 can make the difference between paying a surprise bill and charging a debt that might be difficult to pay off.

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Settling Credit Card Debt

If you’ve maxed out your credit cards and are getting deeper in debt, chances are you’re feeling overwhelmed. How are you ever going to pay down the debt? Now imagine hearing about a company that promises to reduce or even erase your debt for pennies on the dollar. Sounds like the answer to your problems, right?

The Federal Trade Commission , the nation’s consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green.

How Personal Loans Impact Credit Scores

Should I Move Credit Card Debt To A Personal Loan?
  • The application might hurt your scores. When you apply for credit, an inquiry is added to your credit reports. Some credit inquiries may damage your scores for 12 months
  • Your scores might increase as your personal loan ages. At first, a new account might reduce your average age of credit and negatively affect your scores. As your personal loan grows older, it could help those numbers
  • A personal loan could lower your credit utilization. Personal loans are installment loans, which dont impact your revolving utilization ratio at all. You can have a high balance on a personal loan, and it will have little to no impact on your scores. If you pay off credit cards with a personal loan, your revolving utilization ratio should decrease, and your scores may improve
  • Your credit mixture might improve with a personal loan. Scoring models reward you for having a diverse mixture of accounts on your credit reports. If you dont have any installment loans on your reports, adding a personal loan might help your scores
  • Often, a personal loan has the potential to help you from a credit score perspective. Just be sure you make every payment on time. If you open a personal loan and pay it late, it could damage your scores significantly.

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    Enroll In A Debt Management Plan At A Credit Counseling Agency

    Before committing to one of the previous two options, consult with a credit counseling agency.

    The CFPB recommends that you reach out to a nonprofit agency. These agencies must comply with strict requirements that protect you as a consumer and offer additional services like help preparing a budget and courses to help you manage your debts and savings.

    Beware of agencies that propose a debt management plan without first finding out about your financial situation. In those cases, payments are made to the organization and they make your monthly payments to the credit card companies.

    To see a list of approved agencies, visit the U.S. Justice Department’s website. The list is in English, but it shows which agencies offer services in both English and Spanish.

    If you have a complaint or concern about a company that you think has committed credit repair fraud, contact the Federal Trade Commission toll-free at 877-FTC-HELP .

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    First Stop Paying Your Credit Card Bills

    If you’re holding debt on your credit card, it’s likely that most of what you owe is just interest. And that interest just keeps pushing your total debt higher and higher. Seeing your interest compound every month can kill your morale.

    Thats why the first step is to stop using your credit cards and use a debt consolidation loan to pay your whole bill this month.

    Seriously all of it.

    Consolidating your credit card debt onto a loan with a much lower interest rate is the very first step on the path to freedom. Youll end up saving thousands of dollars in interest.

    Repayment plans on debt consolidation loans typically run between 24 months and 84 months, and the interest rates can start as low as 4.99% APR. Meanwhile, its not uncommon for credit cards to have an interest rate over 15% on unpaid balances.

    There are sites that simplify the process and let you compare up to 10 lenders at a time so you can find the lowest rate.

    Wondering if youre eligible? Checking wont affect your credit score at all and can end up saving you loads of money in interest.

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    Avoid Cash Advances On Your Credit Card

    In a moment of desperation, you might consider taking out a cash advance on your credit card. However, it’s one of the most expensive credit card transactions with a transaction fee, higher interest rate, and no grace period for avoiding finance charges. Lack of access to non-debt money sources could signal serious financial trouble.

    A cash advance usually is one of the early stages of credit card debt. Work on fixing your budget and create an emergency fund so you dont have to use a cash advance in an emergency.

    Budgets To Consider Cutting:

    7 Ways To Tackle, And End, Rising Credit Card Debt
    • Vacations – You wont fully enjoy it straddled with debt

    • Groceries – Stick with whole food ingredients

    • Subscriptions – Do you even know what you subscribe to?

    • Clothes – Shop smarter and cheaper

    The time you will need to sacrifice your budget is directly related to how deep of a hole youve dug for yourself. Youve borrowed money, its your responsibility to pay it back.

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    Can A Debt Collector Contact Me And/or Sue Me After The Statute Of Limitations Has Expired

    Yes, debt collectors can contact you after the statute of limitations has expired. You still owe the debt and if you dont respond, the debt collector could still sue you. However, you can present a successful defense that the statute of limitations has expired IF you show up for the court hearing. That IF is in caps because many consumers dont appear in court. Either they dont check their mail to see that a court date has been scheduled or simply ignore the summons to appear. If you dont show up in court, you lose. Case closed. A judgment will be awarded against you.

    Debt Settlements: Why You Should Avoid Them

    For-profit debt settlement or consolidation services claim to settle your debt for less money. However, these services typically charge hundreds to thousands of dollars in upfront fees and thousands in servicing fees. To get your creditors to negotiate, these companies generally encourage you to stop making payments so your accounts go to collections. But this and any account reported as settled damages your credit score. Some creditors refuse to work with some debt settlement companies, so many of your debts remain outstanding. You may owe penalties and late fees on those that went into collections. The success rate for debt settlement is abysmal as well.

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    Put Your Credit Cards Aside

    The most obvious step is to stop using your credit cards until you regain financial control. Putting your credit cards in a drawer, away from sight, will curb your temptation to buy things that you dont have the money to buy in cash. Moreover, youll offset any attempt to reduce your debt if you continue to make purchases on your credit card. Those who have suffered enough or get easily influenced must stop using credit cards immediately. The world still runs fine without them so just lock them up and dont go looking for them.

    Why You Shouldn’t Just Pay The Minimum Amount Due

    How to manage credit card debt during COVID-19

    A minimum payment is the smallest amount you can pay toward your credit card balance each month without getting penalized. You may be tempted to make the minimum payment on all your balances, because it leaves you with more cash on hand. However, this approach can be very costly in the long run. You’ll generally accrue a large amount of interest. In some cases, you can pay more in interest than the original balance. Plus, you risk spiraling into debt that you can’t pay off if you fail to pay down your current debts while building new debts.

    For example, if you have a $5,000 balance on a credit card with a 17% APR. Your minimum payment is calculated as 2.5% of your balance. If you just pay the minimum and add no other charges, it will take 255 months, or more than 20 years, to pay off the debt. You also end up paying $6,045.56 in interest charges, more than the original balance. But if you pay $250 a month, it will take only 24 months to pay off, and you fork over just $921 in interest.

    Use a payoff calculator to help you determine how long it will take to pay off your debt using different payment amounts.

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    Home Equity Loans Or Lines Of Credit

    Similar to loans earmarked for debt consolidation, home equity loans or home equity lines of credit can allow you to put your loan towards existing credit card debt. Given that these loans are secured by your home, you can often have higher loan limits than a personal loan. Of course, the risk involved is that if you are unable to regularly meet the payment terms of your home equity loan or line of credit, the bank can foreclose on your home.

    Like a debt consolidation loan, it can be attractive to wipe out your credit card debt all at once through a home equity loan. But, as you take on your monthly loan payment, take care to monitor and limit any of your credit card expenses to be certain that you don’t build another debt that you can’t repay.

    Example Of The Debt Snowball In Action

    Lets take the same accounts we used in the first example.

    Type of Debt

    To use the debt snowball method:

  • Order the debts, from lowest balance to highest
  • Always pay the monthly minimum required payment for each account
  • Put any extra money towards the lowest balance the personal loan
  • Once the personal loan is paid off, use the money you were putting towards it to vanquish the next smallest balance the credit card debt
  • Once the credit card is paid off, take the money youve been paying and add it to your payments for the auto loan
  • Once the auto loan is paid off, take the money youve been paying and add it to your payments for the student loan
  • Using the debt snowball method, youll end up paying off your accounts in this order:

    • Personal Loan
    • Student Loan

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    How To Get Rid Of Credit Card Debt

    Everybody needs credit. It is a credit card that can be used in different places and for different purposes, whether its buying groceries or paying the electricity bill. But credit cards have a dark side: they are the leading cause of personal bankruptcy in America today.

    If youre already deep in credit card debt then this article is for you. Well provide tips and strategies to help you get out of credit card debt as quickly as possible.

    Spend Within Your Means

    How To Put An End To Credit Card Debt

    The best way to stay out of credit card debt is to spend within your means. Avoid making credit card purchases that you know you cant pay off in full at the end of the month, and try not to let your expenses exceed your income. If you need to carry a revolving balance, make a plan to get your balance paid off as quickly as possible. The longer you let that balance sit on your credit card, the bigger it will grow.

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    Create A Budget And Stick To It

    The more money you can pay toward your credit card debt each month, the faster you’ll eliminate what you owe.

    If you don’t already have a budget in place, start by writing out your average income and expenses over the past few months. Categorize each of your expenses to get an idea of exactly where your money is going. Then you can pinpoint areas where you can cut back and repurpose those dollars for debt reduction.

    If you’re living paycheck to paycheck, this step can be tough. Even if it’s just a few dollars extra a month, though, it can make a difference in the long run. Do what you can to create a budget and continue looking for opportunities to earn or save more in the future.

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