All about Credit Card debt By: CCN.com
If you have been wondering what is this 'Credit Card debt' thateveryone seems to be talking about, its time you knew what itactually is (even if you are not in credit card debt yet). Well,you might be getting into a debt trap yourself and the earlierto know about it, the better it is.
'Credit card debt' is simply the amount you owe to the creditcard company. If you hold a number of credit cards and run adebt in all or most of them then you are already in the middleof what we call as 'debt trap' and it calls for immediateattention. Some people just keep getting new credit cards andkeep shifting the debt to the new ones until they reach thelimit on that credit card too and then they go for yet anotherone. This is how the debt trap works. You keep hoping that thethings will improve and you just keep getting deeper into debt.So what's the way out?
Once you start exhausting your monthly credit limits and startmissing your payments, you start earning a bad credit ratingwith the credit bureaus. A bad rating is not only going toprevent you from getting new credit cards but will also act asan obstacle when it comes to car loans, home mortgages or anyother loans. So how do you handle this situation?
First of all you need to understand that there is no magic wandwhich can help you wipe out your debt. If it has to happen ithas to happen only through your own efforts. So once you knowthat you are in a debt trap and decide to get out of it, youneed to sit tight, analyze and
prepare a list of actions youneed to take. Here are the 3 basic steps for debt reduction:
Gather all your debt information in a document form (could be aspreadsheet). This should include details like What is theamount you owe Whom do you owe it to What is the APR you arepaying on this. How frequently do you use that card Any otherdetails which you feel are useful Once you have these detailsfor all your credit cards. Do a total to arrive at the totalamount you owe.
Check the following: How much cash you have in your bank accountYou income Your expenditures With this information ready,analyze how much of debt you can repay on a monthly basis. Youmight consider cutting down on your expenses or looking foralternative source of incomes to aid you in reducing your debtquickly.
Prepare your strategy. This may include the following: Whichdebt to pay off first (based on the APR rates) Switch to a lowerAPR card Consolidate debt Seek advice from a financial advisorDeclare bankruptcy Just follow these 3 steps and you will havethe blue print of debt reduction ready.
About the author:
About the Author
Rudy Hadisentosa: CCN.com is a free online
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