Paying Off Credit Card Debt
When Paying Off Credit Card Debt, Is it OK Just to Pay the Minimum Amount Required by the Plan?
There are many expenses in your life so naturally you will have to come up with your own individualized budget and assign priorities to what expenses must be taken care of first. However, just because you are not forced to pay much on credit card bill all at one time does not mean it should just put near the bottom of the priorities list and to just pay the minimum.
Remember that your credit card debt is one of the few kinds of debt that actually increases with time. By simply choosing to pay the minimum on a credit card bill, you are subjecting yourself to interest fees. Those fees can have an enormous affect on your budget over time.
Also, keep in mind that the minimum payment percentage rate established by your lender is to make sure you do not completely pay off the debt for a long time. By paying only the minimum required amount, you are subjecting yourself to years of payment with plenty of interest tacked on.
This is why paying off your credit card debts completely should be a high goal in your budget. The faster you pay off that credit card bill, the less in extra interest fees you will have to pay and as a result you will have saved money.
What Should I Do if I Have a High Interest Rate on My Current Credit Card?
The first thing you will want to do is look around at interest rates on other credit cards. Keep in mind how the interest works to, i.e. does the card have a fixed APR or a variable APR? Generally you will want to find a credit card with the lowest interest rates.
Once you have found a card with the low interest rates, compare it to your current credit card. If you card has higher interest rates, you may be able to call up your credit card company and negotiate for a lower rate. Simply say that you have found another card with a lower interest rate and that you will have to switch accounts unless your current credit card’s interest rates can be reduced to match the competitor’s you are looking at. If you have a good credit history, this tactic will usually work.
Who Can I Consult if I Feel My Debts Are Growing Out of Control?
You may want to speak with an attorney who has experience with consumer credit issues. Your attorney can let you know what protections you may have from creditors under state and federal laws as well as help you work out a plan to assort and pay off all of your debts.
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Last Modified: 12-20-2012 04:24 PM PST
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