Thursday, 5 July 2012

Three causes of credit card debt and three ways to get you out

Credit cards are almost a basic necessity of modern life, that there are an increasing number of services you can't access without one. How can you organise a car rental, pay for your vacation or buy online products. However, with the rise of credit cards, there has also been a general increase in debts. An increasing number of people are finding that they can't manage their credit card debts. To find out more, go to

You may be asking "How did I get in this situation?" There are primarily 3 mistakes that are made: 
a) Using a credit card for things that need to be paid for on a regular basis. If you have to use your card for gas or groceries, then you are spending more than you are earning. You can perhaps do this once in a blue moon, but if you're following this pattern on a regular basis, you will end up adding to your debts.

b) Sticking with the same card provider when there are other cards available with more competitive repayment terms. Some folks have been locked into high interest cards, leaving them with high repayments. These high interest cards will also mean take longer to pay off.

c) Making monthly payments barely above the minimum required by your credit card provider. Minimum payments set by creditors are designed to keep you in debt for longer. The minimum required payment is usually calculated to be just above your monthly interest. If you are mostly only paying interest and barely paying off actual debt, then you are unlikely to make any real headway with your debt repayments. By the time the following month's payment comes round, you will no doubt have used your credit cards for buying things, therefore increasing your debt even further.

What can I do to really see my debt reduced? 

a) Use your card for the things that credit cards should be used for, and not for you basic essentials. Here's something radical, why not take the scissors to your card and put it out of use altogether? Do this and I'm sure you'll see a difference in your credit card account balance. Credit card providers can always send you a new one when you need it.

b) Change credit card provider. Find out what are the best deals around and do your research. There are good deal comparison websites out there that can assist you in finding the best card for your needs. Remember to read the small print and beware of getting caught out with offers of low interest which last for a few months, but then revert to a higher rate than on your current card.

c) Pay over the minimum monthly payment required by your card provider. Pay as large an amount as you can each month. As a rule of thumb, try and aim for as much as two times the minimum payment.

I hope this article will give you the information you need to take action today. Act now, and you will be a step closer to clearing your debts.

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