If you are facing credit card debt, then the situation can be quite scary. You might be wondering how you can get out of the debt and what are your options? Such questions often do make the whole situation more perplexed. So, what you should do to stay on top of your financial situation? If you are facing tough time in paying off your credit cards and want to know your relief options, then refer the below-discussed options. But, before we go ahead and discuss these helpful options, let us first get familiar with the warning signs.
What are the warning signs that shows you have excessive debt?
Below are some of the common warning signs that shows you have too much debt –
- Living paycheck to paycheck
- Receiving repeated calls from the creditors asking for the payments.
- When your request for new lines of credit has been turned down.
- Only making minimum payments for your credit card bills.
- Making late payment for bills as you don’t have enough money.
- When you credit card limit has maxed out.
Do any of the above-discussed signs have any resemblance to your situation? You don’t need to worry as there are options available through which you can get your debt under control.
Avoid using your credit cards
It may be easier said than done, but it works. You don’t have to be a rocket scientist to use a credit card and you can easily overspend without giving a single thought about it. So, the basic step towards credit card debt pay off plan is to ensure you don’t make more purchases using your credit card.
Get all the details right
You need to gather every single detail regarding your credit card that includes paper bills, online accounts, and all the details of the credit cards you have. Then, your next step is to calculate the balances in order to get familiar with the debt you actually have, so that you can have an effective plan to pay that bill.
Have a set budget
You can set a budget each month of projected expenses and income. Once you have done this, you actually get to realize if you have missed out any opportunity to direct your money towards paying off the debt. While you may look at it as a laborious job, budgeting can surely help you in eliminating your debt.
Make your payments on time
Probably one of the important points here is to make timely payments. If you continue making late payments, the creditors will penalize your payments and often you have to pay high interest rate. So, whether your choice of payment is via mail or online, ensure that it is made on time.
Go for Debt Consolidation
If you are unable to make the minimum monthly payments, then you definitely need to take some extreme step. You will surely be benefitted if you choose to consolidate your debt. Debt Consolidation is a type of refinancing where you combine your multiple debt accounts into one account with a lower monthly payment. With this method, you also get to streamline your debts; this helps you to have one monthly payment, often the interest rates are lower.
Make more than minimum payments
If you keep yourself limited to making only minimum payments, then you won’t be able pay off your debt quickly and you will actually end up paying more amount than you actually spent.
Concentrate more on the cards having low balances or higher interest rates
You can make a smart move to pay off your credit card debt by paying your smallest balance first. This will help you to attain instant success and above all it will also help in setting pace. According to some financial experts, you should first go for the credit cards with higher interest rate – which helps you to save money in amassed interest. No matter which way you choose, the main focus is towards paying off your credit card debt as soon as possible.
Choosing the method of balance transfer
If you are seeking to have a decent credit, then applying for balance transfer can be your best alternative. Using this method, you get to easily transfer your full balance from one credit card to another one that is having 0% interest rate. You will be saving a considerable amount in interest charges and you get to cut down the months from your debt repayment plan as well. Having said that, you have to be extra cautious though, and make sure you stick to the original plan of making consistent payments to bring down your balance.
Request rate abatement
You may feel awkward to get in touch with your credit card company asking them to cut down your interest rate, but it indeed works. There is no company that can afford to lose business; therefore some companies will cut down the interest rates to keep you as their customer. It is imperative you are polite while talking to your credit card company but at the same time you should be confident enough to put forward your views as well. In case, the company does not show any interest in working with you, let them know that you will choose to transfer your balance to some other company at a lower rate.
Having a good debt relief service provider
Even though you have found the right option to get yourself out of the debt, you have still long way to go. You also need to have a good debt relief program or service provider who can guide you to move in the right direction. Remember one thing, having a good and reputable Debt Relief Company does play a major role in your quest to be debt-free.
Your credit card bills are high and with high interest rates, things are getting out of your hands. Deep down inside you realize that you require an effective way of paying back what you owe. You need to get out of the debt without damaging your credit also. In simple words, you need to have an effective solution that helps you to pay off your credit card bills quickly.
Alas, not every method will prove helpful in getting rid of your debt. The ideal way is to find out a relief plan depending on your financial hardship and while you do that make sure you avoid using all those methods that can make your situation from bad to worse. The following discussed information, in the form of Do’s and Don’ts, will help you make a smart decision.
Credit Card Debt Do’s –
Contact your creditors first
While you are struggling with your debts, if you are thinking of not sharing complete information with your creditors then you should think again. The creditors are not that bad at all, they are always interested to keep you as a lifetime customer. You can have a word with your creditors if they are ready to cut down the interest rates, remove the penalties and the fees or to accept a reduced payment until you catch up.
Consulting your friends and family members
When you are facing multiple debts, you don’t want the people know what you are going through, ideally it shouldn’t be this way. Most of us have gone through some challenges while using credit. Bearing that in mind, you can sit across with your family members or friends to see if they have also faced such situation and what solutions they used to get out of it.
Gather information about the company
The fact cannot be denied that there are multiple companies offering legitimate debt relief services, but along with that there are scams too. Make sure you have checked Better Business Bureau and cross-checked online reviews before you sign on any document.
Stick to the action plan
In order to get out of credit card debt, you need to have an effective plan; all you need is to stick to that plan. You should know that you can’t get deliverance from your debt in few years. It may require extra efforts from your side or even may need to cut back your expenses.
Credit Card Debt Dont’s
Now that you are aware of the things you should do, let us take a look at the things you have to avoid –
- Avoid using a solution without having knowledge of the cost
No matter what option you finalize to get out of the debt, it does have a cost – there is a balance transfer fees of 3% per balance that you choose to move, there are interest rates for consolidation loans, and even debt management programs have their own fees. So, make sure you are aware of the cost element before signing for a debt relief option.
- Avoid using credit cards
Till the time you have eliminated your debt completely, make sure you avoid using credit card. It has been seen quite often that people tend to start charging before they have paid off their debts completely, make sure you don’t commit such mistake. Yes, while you using a relief plan, you can use your credit cards, but it does not mean that you actually should.
- Take expert advice
Yes, you are facing tough time paying off your debts but it’s not that this problem is unsolvable. You should take expert guidance and make sure you don’t feel embarrassed sharing your problem with your friends and family members. There are so many credit counselors who can help you get out of the debt. They are there to help you out and they are not going to laugh at your sufferings. These experts have years of experience in dealing with such situations and will be able guide you in a better way.
- Avoid the old bad financial routine
Once you have dragged yourself out of the debt, it is important to stay that way. You can go online and learn how you can use your credit cards tactically so that you don’t have to deal with the debt problems again in the near future. Developing better financial habits can really prove helpful in maintaining your fiscal health.