Assuming an annual interest rate of 9%, and paying the minimum monthly payment on $3,000 of credit card debt, it could take you approximately 50 years, and result in interest payments equaling $1,500. You would be paying 50% more than if you had paid cash!
Consider the concept of having credit cards but without the high debt load they frequently bring.
Now it’s time to pull out your statement and see the facts on how much you really have in credit card debt. If this frightens you, it is all the more reason to know how much, and what to do about it.
If you have a hard time making the minimum payments, you need to take action before your credit file is trashed, and you have creditors calling daily.
We recommend debt consolidation through a reputable Credit Counseling Service to get your finances under control. They can help you with managing your money, as well as deal with your creditors for you.
Make a list of all your debts, including your credit cards. Include the name of the card and bank issuing the card, the current interest rate, total balance and minimum monthly payment required.
For other debt, such as mortgage, car payments, etc. do the same thing.
Credit Card Debt Facts:
Approximately 20% of all credit card holders had credit card debt in the $6,000 to $15,000 range, and 6% had credit card debt that exceeded $15,000.
Put in a section for other bills you have to pay such as utilities, phone(s), groceries, childcare, allowances, etc.
Then, separately, make a list of income (net take home) for the household; even make a not of non-regular income such as bonus, part-time work, incoming child support payments, etc.
Once you get absolutely everything listed, then compare your income with the expenses. If there is room, and it appears as if you can make extra credit card payments, here is your plan.
- Pay the bills and debt minimums for the month;
- At the end of the month, you should have money left over; take that and pay it on one credit card debt;
- Do this each month until you credit card debts are paid off.
What if you don’t have money left over?
Get free credit counseling advice to help you overcome your debt. Know All Your Options.
If your budget showed you should have, and didn’t, then you need to track your spending to find out where the extra money went. This usually means you didn’t budget for something you should have … so you need to review and adjust your budget now.
If your budget shows you just don’t have enough left over to pay down on your credit card debt, then you need to consider other options such as getting a part-time job, reducing expenses drastically, work with Consumer Credit Counseling or a bankruptcy attorney. It’s time to reduce stress and find a solution that fits you.