True Costs of Credit Card Debt

Debt Notice Costs

Credit cards are the best and worst financial tool consumers use on a regular basis. If used properly, credit cards are a good way to collect reward points and build your credit score.

If you’re living beyond your means with a credit card, however, having one can easily hurt your financial standing and may even lead to financially devastating debt. If you find yourself in that predicament creating a debt consolidation plan should be your first priority.

Financial responsibility is the key to preventing credit card debt. For those new to the credit card debt, the following valuable info may be helpful in choosing options.

Interest Rates

The average American owes thousands of dollars in credit card debt on any given day. Since the average interest rate today is over 14%, simple math leads to the conclusion that these same people pay hundreds of dollars monthly for finance charges alone.

Interest rates today range from 0% to a whopping 40% per year

By reading the fine-print on the card owners agreement you can find how much your credit card debt is costing you. And pay attention to the APR variable, not the stated interest rate!

If you find that these rates are responsible for your debts, ask your current credit card company to have your rate lowered. If lowering your rates will not help or if the company is unwilling to work with you, consider a credit card balance transfer or a lower interest rate.

Keep in mind that fixed rates are not always “fixed”. Credit card companies may change the current rate at any time, so long as they give you 15-days notice of the rate change.

Credit Card Late Fees

Most people in credit card debt are aware that forgetting or being unable to pay for monthly minimum payments can lead to nasty “late payment fees.

Late fees range from $15 to as high as $40. In addition, some credit card companies will boost your interest rate on top of charging late fees if you are late with your payment.

Borrowers are not aware that these late fees can be waived if you call and ask the credit card companies to do so. If you know that you will be late on a bill, make sure to call in advance, and request a grace period. Ask the credit card company representative to document your customer record as proof that you called in advance and make sure to write down the name of the person you spoke to, as well as the date and the time of the call.

Annual Card Fees

Today, annual fees of credit cards range from nothing, and as high $2,000!

In the U.S. the annual fees usually range from $35 – $100. Some credit card companies, however, allow annual fees to be waived simply by calling and requesting it. If you’re paying more than your average annual fee, call the credit card company immediately and question them about it.

Debt Consolidation

If you get behind on all these credit card fees, sooner or later you’ll find yourself in a cycle of credit card debt. By consolidating credit card debt, you can set yourself on a realistic path toward becoming free of debt. This is an effective method for many people.

When you constantly spend more than you earn with your personal income, your budget automatically becomes overburdened. As a result, your financial status becomes limited because you pay even more for everything you charge in the form or finance charges. In addition, credit card payments never seem stop for some because they keep adding more purchases to their balance every month.

Those who maintain a good credit rating and are never late with their monthly credit card payments are the best candidates for credit card debt consolidation

Another option for consumers in deep credit card debt is a balance transfer – there’s various options for credit transfers are available, with many offering a 0% intro APR for up to one year. This makes it possible to get a head start in paying off debts. At the same time, it is important to pay off the balance by the end of the interest free period rather than adding more to it.

Debt Relief & Bankruptcy

If these options aren’t available and you’re stuck in un-payable debt there’s some last-resort options available:

Again, these are last resort financial options. Both have their pros and cons, and you should research each thoroughly before moving forward with either.

Remember that the key to getting out of debt is to be disciplined. Find ways to cut your spending and increase your income. Stick to a weekly budget if it helps keep you on track.

The following post is a guest article from 1-855-Jet-Debt.

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