Sunday, July 15, 2012

What to Do When You are Already Nailed With Your Credit Card Debt?

When you are in debt, you will bear the interest on the money you borrowed every minute of the day. The interest will be compounded until it becomes a monster. And when you are not able to pay the complete amount in your credit bank statement the amount due becomes a loan. When you buy things on credit, you are in reality selling your future - selling your future labor. In many cases when credit card is used, you are selling your tomorrows in order to buy something today.
A credit card is different from a charge card: a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card also differs from a cash card, which can be used like currency by the owner of the card. Most credit cards are issued by banks or credit unions.
The Bad of Credit Card
Some of us cannot accept our financial status and for that we have made the credit card a part of our income especially when we are not receiving a good salary. Some of us want to live like we have more than our real income, properties and other assets. Some of us are envy those who have more money; those who have a bigger and beautiful house and those who own better and new models of cars. Some of us wish we have the same fortune with those rich people who can afford to live the good life with full of luxuries.
If you can only observe closer to those people who grew up living the hard life and with little money who feel so deprived, the moment they earn big money they feel the strong desire to buy everything that they could not buy before. Some of them want to show off to others how rich they have become. There are also people around us who are spending beyond their means through credit cards without realizing that it charges high interest.
What to Do when You are Already Nailed with Your Credit Card Debt?
  • Do not hesitate to discuss about your finances with your family.
  • Use all the money you have to pay your credit card bill – but keep enough money for your basics such as food, utilities and for your rent if you are renting a flat or a house.
  • Tighten your belts – do not spend for anything else until your debt is fully paid.
  • If you have assets that are not so important to keep you can sell them to get out ofcredit card debt.
  • Negotiate with your credit card company for a lower interest rate.
  • Surrender your credit card and tell them that you cannot afford to continue paying with their high interest rates. If they considered it your monthly payment will be reduced.
  • Do this quickly before the bigger trouble kick you off.
The Good of Credit Card
Credit cards are convenient and can also save you. Using credit is a very convenient way to pay for your purchases – if you have the discipline to stay within budget. You need not to carry cash all the time and you get to keep a good record of your expenses. However, you must always keep the copy of your signed slip or the proof of payment each time you use it to keep track of how much you have already charged it. Always pay the full amount of the bank statement every month. If you do it there will be no interest charge. This is using the credit card as a simple debit card. Credit card when used at the right time can help you in emergency and if you don’t have medical insurance you will be accepted much faster in hospital if you have a valid credit card.
Some experts advice the following: Get a credit card if you are sure that you have the discipline to use it only if you are within your strict budget or in case of emergencies. Do not spend your credit card for your wants. Pay in cash unless it is an emergency. But it is still better to pay for your expenses in cash because you will be more aware of how much you are already spending.
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