Credit cards are the one thing that face many financial problems repeatedly, yet still keep going. Owners of credit cards leave a curse on their credit card due to the financial stress they go through with them. However, no problem comes without solution, which is why it is time you get to know your credit card!
Credit Card Debt Trap
Upon purchasing credit cards, the first thing we all see is the rewards. Unfortunately, this is so true and as a result, we fail to think of the bad spending habit we will be left with. One thing we all both do and fail to notice is credit card minimum payment. We spend and spend, and very soon forget the joys a credit card can give to us. We get used to several habits with credit cards, one of which is we forget or maybe do not even know about the credit card minimum payment, which causes us to spend more and dig a bigger hole for the financial problems.
Credit Card Habits
- We spend more than we have
- Encouragement for foolish spending habits
- Stops up from increasing our money
One thing we all turn to is the credit card minimum payment, as we can buy many things with the help of credit cards, which we may not be able to purchase otherwise. We do not have to wait to save up; we can simply buy the thing we want, except with interest. Due to this, we really do not think twice about what we are buying, until the time we see our bills, of course! Lastly, we cannot save money or develop our personal wealth. The reason behind this is that we are tied to debt payments.
Our money is wasted at many different levels with a credit card, as high interest and various financial charges occur, unless you used your card wisely and only during the times, it is most necessary. Instead, we fall into the trap of credit card minimum payment. A credit card should not be used as a primary method of paying, and should only be used when it is essential.
Do Not Waste Your Money
There are number of ways how credit card minimum payment can waste your money. The creditor’s way to making you pay a lot more interest on your cards is through credit card minimum payment. If you pay higher interest, which you will have to with the credit card minimum payment, this will definitely be profiting your creditor. It is important you read the contract of your card in order to discover the things your creditor will never tell you about.
Thankfully, the federal government knows about credit card minimum payment, which is why the Credit Card Act was created. Due to this act, credit card companies must place a couple of details (below) on all billing statements:
- Length of time it will take to finish paying the current balance
- The overall interest amount that will be paid to the creditor for the debt
Paying More than Minimum
Okay, so paying credit card minimum payment is not a good thing. Listed below are several ways to go about this, with the only problem occurring in the situation you do not have enough money in order to pay over the minimum. Firstly, you should stick to life without the use of credit cards. This is essential specifically until the time all the balance on your debts has been paid off. After this, you need to search for several debts relief programs. These can be of much help and assist you with paying off what you owe. Listed below are some options you have:
- Debt consolidation loan
- Debt management
- Debt settlement
A debt consolidation loan consists of a master loan. This is used by the customer in order to pay off the credit card debts. Once you have successfully paid these off, you can also immediately drop the stress about minimum payments. However, paying the amount on your new loan is something that you need to worry for. If you have a good credit score and have a personal or secured loan, then the monthly payment for you may be very low.
The debt management relief program consists of a debt counselor that helps the customer to create a debt management plan. This plan will be offered to creditors. Your new payment scheme will be accepted only if your creditor approves to the low payments that are on your plan. If this is the case, then your minimum payment can be passed over.
Debt settlement involves discussing with your creditors to let you pay off just a portion of your debt, with them forgiving the rest. In order to convince them, you will need to tell them that you are in a financial crisis. After this, you pay the settlement amount, only if they agree that is. The settlement amount has nothing to do with the requirements of the credit card minimum payments on your cards.