There have been many men and women over the past months who either lost their job or become underemployed, and as a result, credit card debt built up as many used their cards to keep themselves above water. Credit cards have been a lifeline for many unemployed men and women who were trying to make ends meet until another job opportunity came along, but as a result of a slow growing job market, many men and women who were unemployed or underemployed find themselves in a situation where they owe a great deal of credit card debt.
However, there are ways in which credit card debt can be combated but it will be dependent upon one’s financial situation, financial practices, and personal choices as to which will be the best. New credit card laws give consumers more information about how much they will pay in total, when interest and time are factored in, if they only make minimum monthly payments. This has created a sense of urgency for many cardholders who want to get out of credit card debt quickly and avoid paying more.
For cardholders who have acquired a large amount of credit card debt and are faced with the fact that they may end up paying a large sum on their debt before all is said and done, many have been seeking ways to erase their credit card debt quickly. However, credit card debt will take time to repay, but it can be combated in ways that can be more affordable than others. Two of the most popular methods for combating credit card debt are credit card debt consolidation loans or simply forming a repayment plan and attacking credit card debt one source at a time, which is a practice made famous by financial advisor Dave Ramsey.
Credit card consolidation loans are often frowned upon by some but suggested by others as they can be beneficial for dealing with credit card debt. Yet, if only minimum monthly payments are met, credit card costs can grow to be quite expensive. As with a single credit card debt source, a debt consolidation loan will have a principal amount and interest which a debtor is paying down, and many believe that consolidating credit card debt will be less cost-efficient since a higher principle amount will have to be paid down and interest will be able to accrue on this higher amount. However, there have been cardholders in the past who have consolidated their credit card debt but paid as much money as they could from month to month, meaning they paid more than the minimum requirement, and have gotten out of credit card debt in a timelier manner.
Yet, as is the case with combating credit card debt separately, paying as much money as one can on a debt source will, obviously, allow that source to be erased faster. Many people will keep credit card debt separate because smaller amounts may be easier to erase than one large sum, but this again will depend upon one’s financial situation. Individuals who are attempting to erase credit card debt will simply have to look at the amount of credit card debt sources they have, make the calculations, and see how much they can afford to pay on their credit card debt from month to month and what the overall cost will be if they pay their debts off separately versus using a consolidation loan.
While the choice a homeowner makes when it comes to paying off credit card debt will be dependent upon their personal situation and preferences, one universal theme that holds true is that interest rates will increase the overall amount that is owed on debt and, if left unchecked, can extend the repayment time and amount takes to get out of debt. No matter the option a credit card holder chooses, paying more than their minimum monthly requirement will be beneficial since more of the principal amount will be paid down, which will leave a smaller amount on which interest can build, and that will ultimately lead to a lower cost overall when credit card debt is finally erased.