8 Credit Card Debt

 ‘Credit card debt’ is a much discussed topic in the commercial and social circles. A big section of the population has been bit by this bug called ‘credit card debt’. Can’t blame them much; as such, it’s pretty easy to fall prey to this bug. 

The main reason behind so many credit card casualties (rather credit card debt related casualties) is that many people don’t understand the concept of credit cards properly. They treat credit card as free money that is never to be returned. Thus all the discipline, which would otherwise have been exercised with spending hard-earned money, goes for a toss.  

That means people overspend and get into credit card debt. They keep spending till they reach the credit limit on their credit card. Some people go to the extent of treating that like a game and consider it a defeat (or consider their credit card under utilised) if they don’t hit the credit limit quick enough. These unnecessary spends result in a situation where they are not able to payback their credit card bills and end up paying interest on the amount they owe. 

This keeps building up their credit card debt and they soon find that the interest component has become a regular feature in their monthly expenses and it is there even if they spend nothing on their credit card. That is credit card debt on the prowl. Soon they find that their current credit card can no longer handle their needs and start looking to get another credit card. With the new power of credit, they let themselves loose again and follow a ‘shop till you drop’ routine. 

Soon the credit limit of the new credit card is reached too and they again default on payments. This is how credit card debt builds. Soon they learn about credit card debt consolidation and other credit card debt elimination techniques. They are quick to grab such credit card debt reduction techniques, but that’s not because they are serious about reducing their credit card debt but because of the attractive low APR offers. As if it were booty, they again get back to building up their credit card debt. All the while they are spoiling their credit card rating and they soon realise that no one is ready to lend them money because of their credit history.

 They can only get a secured credit card now (where you first deposit money into your credit account and then only you get the privilege of spending it (50-100% of it) using their credit card. Credit card debt collection agencies, auction of their goods and bankruptcy is the next thing that hits them and their dream run is blown away in a moment.

The moral of the story – “Understand the concept of credit cards and treat credit card debt with all seriousness”.

Credit card debt settlement

‘Credit card debt’ is the worst of all nightmares. A successful credit card debt settlement is like getting a new lease of life. Credit card debt settlement is a wonderful stress relieving mechanisms. Once you are done with your credit card debt settlement, you are assured of a much better life. All those nagging phone calls and mails will become history and all that surmounting tension would be gone. That’s why credit card debt settlement is so essential.

You can approach credit card debt settlement in 2 ways. You can either go for credit card debt settlement all by yourself or you can take advice from a credit counselling company or a professional. Any of these credit card debt settlement methods are fine, as long as they work for you and help you get debt-free quickly. If you go for credit card debt settlement all by yourself, you will need to analyse the various options available to you e.g. checking on various balance transfer offers available in the market, checking the short term loan options with the banks etc etc.

However, if you want to take credit card debt settlement advice from a professional, you should be able to trust the advisor fully. So you need to check the credentials of the credit card debt settlement advisor/company. There are hordes of people and companies that advertise “credit card debt settlement in one day” or something of that kind which will look just fantastic. Such credit card debt settlement offers/advice are generally not genuine.

Moreover, you need to understand that credit card debt settlement cannot happen overnight (unless you win a lottery or something like that). So, beware of such agencies. That said it’s important to mention that there are a lot of good credit card debt settlement advisors/companies available too who will not only give you genuine credit card debt settlement advice but will help you throughout until you are finally out of debt. 

Their advice may, in fact, more than compensate for the fee that they charge you for credit card debt settlement. These credit card debt settlement companies/advisors will be able to help you in the best way if you tell them your current financial situation correctly. Your future plans are important too, as they might influence the decision on ‘What route for credit card debt settlement would work the best for you’.

Moreover, once you are done with your credit card debt settlement, you should also take measures to avoid falling into that pit again.

Credit card debt relief

Credit card debt relief is what every debt-struck credit card holder is looking for. Credit card debt relief is not just about reducing or eliminating credit card debt; credit card debt relief is also about getting de-stressed. Credit card debt relief is about working for oneself and not just for the credit card debt that you have on you. Yes, it’s unfortunate but true. In fact, you can hear statements like “I have got a better job, now I can pack up my credit card debt even faster”. So, in that sense, credit card debt relief is really about getting your life back on the normal track. 

The most important credit card debt relief comes in the form of de-stressing you. Everyone knows about the harmful effects of stress; so, if credit card debt relief means postponing your purchases for later, you should do so. There are no goods out there that can give you as much joy as credit card debt relief can. Besides postponing the purchase of your favourite goods, there are few more things that you need to bring into practice in order to get credit card debt relief. 

Most of these credit card debt relief mechanisms advocate restraint spending e.g. preparing a (tight) monthly budget and sticking to it. Using cash instead of card for making the payments for your purchases is another advice. Debt consolidation is another popular way of getting credit card debt relief. You will find a lot of advice (and you can even hire a consultant) for ways to achieving credit card debt relief. So, there is no dearth of advice on credit card debt relief or credit card debt consolidation or credit card debt elimination.

 However, what is not so common is the advice on how to act in the post ‘credit card debt relief’ period i.e. after credit card debt elimination. It goes without saying that if you don’t exercise care in the post ‘credit card debt relief’ period, you might again fall a prey to credit card debt.

So, if you have been refraining from making purchases, you should not, all of a sudden, start purchasing all those favourite goods that you had been avoiding. The recommended guidelines for post ‘credit card debt relief’ period are not much different from the ones for achieving credit card debt relief. Here are the top 5:

1. Plan your expenses using a monthly budget

2. Do not buy anything that you don’t need

3. Do not go for  too many credit cards (just one or two should be sufficient)

4. Always make full payments of your credit card bill and do it before the due date

5. Never use more than 60-70% of the credit limit available to you.

Credit card debt reduction

Getting into debt is easy but getting out of it really a difficult task. This holds good for any kind of debt and includes credit card debt too. Credit card debt reduction needs planning and discipline in the way you spend money.

Credit card debt reduction starts with reduction in the expenditures you make using your credit card. So, the first trick for credit card reduction is to go for shopping without your credit card (carry some small amount of cash). This credit card reduction technique isn’t asking you to stop shopping, instead it’s just asking you to seriously evaluate the need of anything you want to purchase and not just purchase it on the spur of the moment. 

So, if you really-really need to buy it, you will go back to your home to fetch your credit card thus introducing a delay that is instrumental in killing spur-of-the-moment purchase (and hence helping in credit card debt reduction). It gives you time to evaluate if it’s really worth going back home and getting the credit card for purchasing that item. So, in this case, credit card debt reduction is achieved by preventing the debt from building up further. It’s a very effective credit card debt reduction measure.

The other effective way of credit card debt reduction is debt consolidation i.e. consolidating debt from high APR credit cards to a low APR one. So this credit card debt reduction measure works by reducing the rate at which your credit card debt grows.

 Moreover, this way of credit card debt reduction also gives you a breather in the form of a short initial period when the APR is 0%. Besides credit card debt reduction, debt consolidation also brings some additional benefits which are basically in terms of rewards etc offered by the new credit card supplier. 

Thus this method of credit card debt reduction is really more than just a credit card debt reduction method – it’s a benefit provider too. If you are not comfortable in taking forward this method of credit card debt reduction, you can seek the help of a credit card debt assistance company.

Besides these two credit card debt reduction measures, which are really the most important credit card debt reduction measures, there are other methods too for credit card debt reduction. Another one is to ask your current credit card supplier for help in credit card debt reduction i.e. by lowering the APR. It might work out for you (as it does for some people).

Also remember, that there are people (professionals) out there who provide advice on credit card debt reduction (just in case you need them).

Credit card debt negotiation

Credit card debt is really a menace and a lot of people are facing it around the globe. Credit card debt consolidation and bank loans are well known as ways of reducing and eliminating credit card debt. In all this confusion, credit card debt negotiation almost gets forgotten. 

Well, credit card debt negotiation starts right from your credit accounts where you have the most hard-hitting credit card debt. This means credit card debt negotiation has to be taken up with your current credit providers. Before you misinterpret it, let me clarify that we are not talking about chucking off a portion of your debt through credit card debt negotiation. 

We are talking primarily about using credit card debt negotiations for getting the APR on your current credit cards reduced to some lower figure. So, credit card debt negotiation is about talking to your current credit card suppliers for informing them about your intention to clear off your credit card debt and using your skills (credit card debt negotiation skills) to agree a lower APR rate with them. 

Basically, credit card debt negotiation is about asking your current credit card suppliers for help/assistance in clearing off your credit card debt. If credit card debt negotiation is successful, it will save you not only money (due to reduction in APR) but also the hassle that is associated with looking for a new credit card (to transfer balance). 

However, if the credit card debt negotiation, with your current credit card supplier, doesn’t yield the desired results, you will have to look for other credit suppliers who can help you in consolidating your debt. Again, you will need your negotiation skills (rather credit card debt negotiation skills) to get a good deal from them. If your credit card debt negotiations work out well, you might be able to get a really low standard APR or you might get a longer term on 0% APR (or you might get both). 

These are really the most important things and your credit card debt negotiations should concentrate more on these than anything else. The other thing to include on your credit card debt negotiation would be the credit limit and other benefits. Here, you are basically trying out the possibility of getting a better credit card as part of your credit card debt negotiation. For people with really bad credit rating, getting an unsecured bank loan or getting another credit card (for balance transfer) is really difficult. For them, getting an unsecured bank loan or credit card is what you would term as credit card debt negotiation.

So, don’t hesitate in going for credit card debt negotiation. It is surely an option available for all.

 

Credit card debt management

Though a lot of people are comfortable with going forward with credit card debt management all by themselves, not everyone is. There are people who don’t really want to tread into the territory of financial issues (credit card debt management included). Such people generally prefer going to debt assistance companies for advice on credit card debt management or for getting the credit card debt management done through them.

 However, even before we talk further on this topic of credit card debt management, it’s imperative to understand that any external person or agency can only do a proper credit card debt management for you if you strictly follow the advice/guidelines that they formulate as part of credit card debt management. These credit card debt management guidelines are generally related to controlling your spending (which basically means perseverance and contentment). 

Going to a credit card debt management company or a credit card debt management advisor/professional is not meant only for people who are foreign to financial topics but is sometimes fruitful for other people too (who are going with credit card debt management all by themselves). This arises from the fact that these credit card debt management professionals (as any professional) would have more knowledge in that field than anyone else that is not from that field/profession. 

So, firstly, you wouldn’t know all the tips and tricks that the credit card debt management professional would know (and in fact this is something that you cannot read and learn overnight). And secondly, it will save you a lot of time; because the person who practices credit card debt management as a profession would know about all the latest offers etc that are available in the market e.g. balance transfer offers etc (and hence you don’t need to go looking for all this stuff all by yourself).

 All in all, a credit card debt management professional can help get you a better deal that might more than compensate for the fee charged by that professional. If you look around you will find that there are hordes of companies and professionals offering credit card debt management services. However, the key here is that you choose someone whose credentials are already established (or who can prove his credentials to you). 

One good way of selecting a credit card debt management company/ professional is to check with a friend or someone from your family, if they have used any such service in recent times. After all, references are the best way of building trust.