Posts Tagged ‘credit card debt’

Debt Settlement vs Bankruptcy

Debt settlement  Why should you consider it before bankruptcy?

Debt is major concern for one and all given the present economic scenario. However, the pertinent question that remains is what the major steps that can be taken in the face of debt to erase it altogether are. This is amongst those financial considerations that need to be contemplated seriously while taking into consideration various other factors. Now, talking about erasing debt, you’re sure to be wondering whether or not it’s really possible to “erase debt”. Well, this is again a frequently debated question too. If you’re practically over your head in debt so much so that you’re unable to pay your bills and getting harassed by collection calls, then it’s definitely time that you took things seriously.

Credit Debt

You probably know that feeling of giving in to temptation when it comes to making a must-have purchase. And it`s so much easy to cave in when you can pay for it with plastic rather than cash.
But credit cards, just like insurance, loans, buy to let mortgages or any other financial product should be treated with respect. In other words, make sure you really know what you`re letting yourself in for. What might seem a great idea now could turn into a huge problem in the future.
With credit cards, it`s important to properly understand how they work and why the providers are so keen for you to spend money on them.
Consider this example to see how credit card debt can end up costing a great deal more than you might have thought. Jane splashes out on a designer handbag. It costs $1,000, but she reasons that if she puts the purchase on her credit card she`ll only need to pay off the minimum each month, because it will only come to $20.
So far, so good. Jane buys the handbag and can easily afford to make the $20 monthly minimum payment (which in this case equates to 2% of the original amount). She continues to do this until the debt is cleared.
However, what she hadn`t bargained for was that it would take so long! Because she`s only paying off the minimum amount each month, it takes Jane a staggering 16 years to clear the handbag debt. By this time her designer bag will have long ago been consigned to the back of the wardrobe.
During those 16 years, assuming an APR (annual percentage rate) of 15%, Jane will have paid back not only the original $1,000 cost of the bag, but also a whopping $1,214 of interest. The bag will have ended up costing her $2,214, well over twice what was on the price tag.

Keep Card Debt Under Control – Avoid Late Fees

Your credit can be ruined if you are constantly missing payments or are paying your credit card bills late.  When you miss payments, fees and penalties add up fast. Card debt can get out of control fast to the point where you won’t be able to even pay the minimum  payment. 

To make sure this don’t happen to you, you should always pay your bill on time; always avoid missing a payment.  If you can’t pay the entire amont due you should always pay the minimum payment amount.  You may be able to pay more later.  When you have more money, you may be able to send in an additional payment later in the month.

Debt Settlement Can Reduce Balances But…

Credit card debt is a major problem these days and medical debt is one of the major causes of personal bankruptcy. Many are at wits end, worrying about debt they cannot pay and many are looking at debt settlement as a solution to reducing that debt.

Debt settlement is a process where your outstanding debts are greatly reduced and you are required to pay only a portion of what you originally owed your lender. You could settle up to 40% – 50% of what is owed.

Debt settlement can have you debt free in a 12-36 months compared to years of paying high interest balances.