Everyone knows that credit card debt is a huge problem around the world, just in the US alone credit card debt affects so many. In most cases the credit card debt is because of irresponsible credit card use, but sometimes it is because so many people are using their credit cards just to help make ends meet every month. We have covered debt and responsible credit card use many times in our blog, but since the holiday season is approaching we wanted to write about irresponsible credit card use during the holidays.
Every year when the holidays arrive people spend a lot of money, many times it is not cash people are using for their holiday shopping, instead they are using credit cards to pay for most of their purchases. This is fine if you are careful not to overspend and you will be able to get it paid back within a few months after the holiday season is over. Once again this is not the case and many people spend way more than they can afford when this time of the year approaches. Christmas is one of the leading times of year for people to dig themselves deep into credit card debt, and then they can only keep up with minimum payments afterwards, and just paying the minimum is going to cost you more and more in the long run when the interest is factored in.
There are many things you can do to help eliminate credit card debt due to the holidays, and once you find what works best for you then you can have a great Christmas every year without causing financial problems for yourself.
- Research other credit cards – If you have a high interest card then try spending some time finding one with a lower interest rate. Many times you can find a good card with a lower interest rate that also gives you other benefits such as 3 months with no interest. A few months of no interest can really help out if you limit what you spend on your card to what you know you will be able to pay back within the no interest time frame.
- Start saving early – This is the best way to go in my opinion, as soon as Christmas is over start putting money away for the following year. Doing this will give you plenty of cash so you don’t even have to touch a credit card, if you can put away $20 each week out of your paycheck starting right after the holidays by the next Christmas you will have over $1000.00 saved up to spend next year when you go shopping. There are many banks and programs you can find that offer special Christmas club accounts, and with many of these you can earn a little extra from interest and special offers many financial institutions offer for these types of accounts.
- Start shopping extremely early – This is kind of the same as saving money all year but instead you could just start doing your shopping in January or February. If you pick up a couple gifts each month by the time the holiday shopping season arrives again you will already be finished, or at least very close to it. Then you can go out and finish the little bit of shopping you have left when the holiday deals come out every year. This is a great way to use your credit card responsibly since you won’t have to charge much if anything at all.
- Search for better deals – I know for me personally I have been doing my holiday shopping strictly online and I have found better deals than I would find at any Black Friday sale and it is much more convenient. Spend some time comparing prices on the web and you can save a lot of money in most cases. There are many sites that offer price comparisons on products that can make this easy. If you do this throughout the year you can save a lot of money and you will not have to deal with the madness of physically going out shopping during the holiday season. It is really a win-win since you can enjoy the convenience of your purchases delivered right to your door and you can also save a lot of time and money.
Hopefully these tips can help you plan better and save some money, and most importantly help you stay out of credit card debt. It is very easy to fall into that holiday shopping trap and maxing out all of your credit cards without even thinking about how you will pay it all back. When using a credit card you should always make sure you will be able to pay it back in a timely manner because the high interest rates of many credit cards will get you deep into debt very quickly.
Image Credits: jimmiehomeschoolmom
Categories: Credit Cards
When it comes to paying down debt, it is important to make sure that you are doing what you can — as fast as you can. Credit card debt normally comes with high interest rates, so it is vital that you try to pay it down as fast as possible. The longer it takes to pay down your credit card debt, the more money you waste paying interest. Generally, there are two main ways you can accelerate your credit card debt pay down:
- Cut expenses
- Increase your income
Of course, if you combine the two methods, you will be more likely to pay off your credit card debt even faster.
Image Source: The Comsumerist via Flickr
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Categories: Credit Score, Debt
When times are tough economically, more and more people find themselves out of options. They are drowning in debt, and bankruptcy is an appealing way to deal with that problem. When you’re at the end of your rope, you’ll do whatever it takes to hold on, no matter how much a bankruptcy might hurt your credit score in the long run.
This is especially true when you’re facing large credit card bills. The fact of the matter is that credit card accounts are unsecured. This means that the company can’t come and repossess your car or house. It also means that you have less motivation to figure out how to deal with it, at least when compared with something like a car payment or mortgage payment.
Programs can help
Bankruptcy, however, isn’t the only solution. Many banks and financial companies are offering their credit card customers a way to keep out of bankruptcy and still keep their accounts current. The companies are offering programs and arrangements that may let consumers out of things like late fees and charges.
The trick is that you actually have to talk to the creditor. They’re probably not going to call you up out of the blue and offer you the best possible deal. In some cases, they may contact you to let you know about specific programs, but you can’t count on it.
What they can do
Depending on the particular lender, there might be a number of options available to you if you’re behind on your credit cards. Here are some of the kinds of things you may find that the credit card companies can do for you:
- Make a payment arrangement. Some will let you pay less than the minimum amount due for a certain amount of time without penalty.
- Lower your interest rates temporarily. While you’re not likely to see a permanent reduction, some companies will allow you to reduce your rate or even stop charging interest for a short period of time while you get caught up.
- Forgive fees. They may be willing to drop late or over limit fees from your account, as well.
- Settle for a lump sum. Some companies will accept a lump sum payment, often as little as 50 percent of your balance.
Categories: Advice, Credit Score
It may start out as a very small indulgence. The sale is unbeatable and money won’t be a problem at the end of the week because it’s payday. But the credit card bill doesn’t get paid off. Or, perhaps it’s a true necessity. A medical emergency, car repair or house problem that needs to be taken care of so it’s put on the credit card. It may even be due to a sudden drop in income, savings are used up and the credit card is a last resort for making ends meet.
Whatever the starting point, the end result is massive debt. It is a self-feeding debt that continues to grow. These stories highlight the debilitating debt spiral. They also provide glimpses of hope and victory as people have started taking charge of their finances and building a credit card debt free future.
- Master Your Card :Are you a credit Card junkie? Are you hooked on credit?
- Mother Jones: Credit card companies unwilling to help customers when victims of fraud.
- A Day Late and a Dollar Short: Paid off over $23,000 worth of credit card debt in just 18 months. This blog helps others to rid themselves of debt
- Ask Mr. Credit Card: Interview with a student drowning in $15,000 of credit card debt.
- Smart Balance Transfers: Credit card horror stories part 37.
- Get out of debt: Only making minimum payments and drowning in debt. This individual went bankrupt after economy tanked in 1990 and his real estate company failed and has worked back to financial freedom.
- Credit bloggers: The nightmare of co-signing a credit card.
- WiseBread: How debt fools people.
- New Credit Rules: Credit card horror stories.
- Americans for fairness in lending: Credit card horror stories from around the country.
- Fun Times Guide: Store credit cards and how they can hurt you. They offer rewards upfront but can hurt you in the end.
- Finance and fat: Follow the financial journey of an individual $265K in debt.
- Get rich slowly: Drowning in debt resorting to payday loans and paying bills late.
- The amateur financier: Confession time, credit car debt, lost job and the bills started mounting.
- Blogging Away Debt: When we finally decided to shape up our financial life in February of 2006, our credit card debt was over $37,000. How can someone let their debt get that high?
- Women 24 : Drowning in debt article and comments.
- The Simple dollar: In over her head in credit card debt and personal loan to tune of $60,000 and growing.
- Frugal Dad: $80,000 in credit card debt, wondering where to start?
- Maxed Out Generation: This blog explores the human side of debt, what the credit industry doesn’t want us to know, and strategies for survival.
- Personal Finance by the Book: Personal Finance by the Book: When this couple married they had an average income and $21,500 in debt.
- Learning Curve: a love hate relationship with credit cards
- Rich Credit Debt Loan:The average American household has $8,000 in credit card debt.
- Youth Success NYC: Maxed out and shopped until she dropped into debt. Her debt problems started when she went to college and got her first credit card.
- McClatchy: College students’ credit-card debt spurs concerns. 24 percent have used their cards to help pay tuition.
- Salon:Big fat unpaid credit card debt, $500 a month to keep up minimum payments.
- Stop payday predators: the vicious cycle of taking cash advances from major credit cards to try and pay off payday loans.
- Card Ratings: Student credit cards a recipe for disaster.
- Clearpoint Credit Counseling Solutions: Credit card problems affect the well educated with good incomes.
- Budgets are Sexy: Check your credit card statements to make sure no unauthorized charges.
- Bundle: His credit card spending was out of control. At $5000 and climbing.
- Legal Helpers: 10 bad habits that lead to financial disaster
- Dollars & Sense:Credit card debt a disaster waiting to happen
- Live Cheap: Debt is a monthly payment trap.
- Debt Free Adventure: How much the interest on their debt was costing this couple monthly and why they got mad at debt.
- Inside Higher Ed: Long distance Mom drowning in credit card debt after medical emergency
- Debt Kid: Digging out from under $300,000 in debt.
- Money Stance: Follow his progress as he digs out from under half a million dollars in total debt.
- Rather Be Shopping: How she got out of credit card debt up to her eyeballs.
- Opposing views: College students drowning in credit card debt
- Liberty Consumer Services: He remembers his first credit card purchase, but he doesn’t recall when things got out of control. Soon he had two or three Visa cards, several catalog and department store cards, and a gas card. They were all maxed.
- The Debt Hawk: During undergrad and law school, he put emergencies onto my shiny new credit card and racked up $20,000 in debt.
- Young Money Talks: Credit card companies exposed as they charge large fees to students already struggling to pay off $20,000 balance.
Categories: Credit Score
