Debt Consolidation Loans » Credit Card Debt

What’s So Bad About Credit Card Debt?

Shaun Connell — Thu, 02 Dec 2010 21:59:57 +0000

When you hear or read about the dangers of being in debt, you’ve probably noticed that credit card debt is singled out from all the different types of debt. Student loans, auto loans, and mortgage loans seldom get the amount of attention that credit card debt gets. There are a few reasons for this.

There’s no fixed repayment period on credit card debt.

Student loans and car loans are installment debt. They have a fixed repayment period between 5 and 20 years, depending on the loan amount and your monthly payments. If you keep making your payments, you’ll eventually pay the balance.

Credit card debt is revolving debt, meaning you can reuse the credit limit repeatedly and possibly never repay the balance. The minimum payments on credit cards are often so low that it would take years and lots of interest to finally repay the balance.

Credit card debt costs more.

Interest rates on credit card balances are higher than other types of debt. So, if you’re not paying your balance in full every month, your cost of borrowing is well beyond that of your other debt obligations. It gets worse as your balance gets higher and when you make minimum payments. The money you pay on interest could be going toward other debts, retirement, or other savings.

If you make a late payment on a credit card balance, you’ll have a variety of penalties – late payment fee, negative mark on your credit report, and a higher interest rate. Late payment penalties apply for other types of debt too, but usually not the higher interest rates that make debt harder to pay off.

Credit card companies can change the rules.

The recent Credit Card Accountability, Responsibility, and Disclosure Act puts a lot of limits on how and when credit card issuers can change your credit card terms, but the fact remains that they can still make changes to your credit card agreement. These changes can make it more expensive to pay back your credit card balance. That’s not the case with many other types of debts. When you sign up for a loan, the terms are spelled out and they usually don’t change the duration of the loan.

You don’t remember what you’re paying for.

When you send a mortgage payment, you know you’re paying for the roof over your head; the car payment is for the vehicle you drive; and your student loan payment is for your education. But what are you paying for when you send your credit card payment?

Because you can buy so many different things on your credit card and pay the balance at your leisure, you probably don’t remember exactly what you’re paying for. So paying back credit card balances becomes a chore. You can’t appreciate sending money to the credit card company because you don’t know what you’re paying for. And that negative emotion causes many people to delay paying back their credit card balance, which only makes it harder to pay the balance.

Credit cards themselves aren’t bad when you use them responsibly. That means paying your balance on time and in full when an interest rate applies to your balance.

How Credit Cards Destroy Your Personal Finances

Shaun Connell — Sun, 30 Aug 2009 16:20:13 +0000

There are many way’s that credit cards can destroy someone’s life and destroy it quick. Credit cards are good people think but when they get maxed out and the payment get’s in the way of your regular monthly bills then you have a problem. Credit cards can be dangerous and harmful to you and your family. When you decide or even if you don’t decide to get a credit card this will make or break you.

My advice on a credit card is if you don’t need it don’t get it. I really don’t think that anyone needs one because of the barron that it puts on families today. Families are living off of credit cards today and that is why we are seeing so many forclosure’s, Bankruptsy and things in that nature. I personally have had credit cards and don’t think that i will ever have another one for many reasons.

When you get behind with a credit card company they are going to make so much money off of you that you will never be able to get caught up. You may get caught up but i guarentee that it is gonna cost you ten times as much to get caught up. Yes everyone today gets behind on something. That is life and we just have to deal with it.

So before you go and get or send out for a credit card you need to ask yourself a few questions am i going to be able to afford this or is this going to damage my life. You alway’s want to do everything that you can do to make it easier on you and your spouse or better yet even yourself. Remember credit cards can be a good thing for some people but i would say eighty percent of people that have a credit card are in trouble with it because of the way the economy is. Alway’s play it smart never let something like a credit card ruin yours or someone else’s life. There will be times to where you can’t help but to charge something But if you do just alway’s make sure that you make your payments on time.

Want Out of Credit Card Debt? Rip Up Your Credit Cards

Shaun Connell — Fri, 21 Aug 2009 22:17:32 +0000

Those in credit card debt are in this situation for two reason only. One is an illness has cost them money and they had no medical coverage, either private or public. Not a smart move. The second reason is that they cannot manage money. Therefore, credit cards in and by themselves are not evil. They are evil for those who end up paying the minimum and die in debt. When they die the debt need not be legally paid unless it is tied up in an estate matter.

Moving on to the core question. If you cannot handle money tear up or rip up or cut up your credit cards. On the other hand there are those who handle debt nicely, even though they may not make all that much money. In this case they should go slow with the scissors.

When you rent a car you can put the reservation on a card and pay later with cash, with no balance on your card. When you charge something you are getting an interest free loan for a month. If you pay it back in a timely fashion, you owe no interest and the credit card companies despise you as much as the non-payers.

You must ask how important cash is at the time. If you must have cash on hand, charge and pay at the end of the month. If you need to watch the big game and make a purchase of several hundred dollars, pay it off in a planned pattern. Doing so will cut the interest owed to a negligible amount no matter how high the rate of the card. And all this time you have the product and cash for everyday needs.

Naturally, it would be the optimum situation to have put this television on a low interest or no interest card. I can attest to this because some companies were losing money on me and dropped me even though I used their card often. I was not paying them sufficient interest. I was as bad a deadbeat, as a late payer.

As you have noticed I was never in debt. If you got into debt from buying everything and anything then it is time to get the scissors out or rip up your credit cards. All of them, and start a disciplined regimen until you learn the value of money and how dangerous debt can become. Ask the U.S. government, but then they can print money — probably won’t be seeing Obama asking for a debt consolidation anytime soon.