Carrying a bit of credit card debt from month to month is relatively common these days. After all, many credit card holders use their cards fairly regularly as a way to earn rewards points and even cash back, and many credit card companies offer these nowadays as an incentive for using them. So long as one is able to pay off the credit card balance in full at the end of each month, using a credit card can build one’s credit score and result in some great rewards from the lending company in the process.
When credit cards become a problem is when people charge more per month than they are able to comfortably afford to pay back. As a result, they may make the minimum payment and may miss a payment altogether. This can result in the balance building up to the point that it becomes very difficult to pay off. Not to mention, most credit card companies will hike up interest rates or even charge late fees and other penalties for those who do not pay on time. The end result can be a huge amount of debt that may seem impossible to overcome.
If the above situation seems to describe you, the first thing to understand is that these kinds of things can happen, even to the best of us. Your inability or difficulty in paying off your credit card debt does not necessarily mean that you are financially irresponsible. In fact, the majority of people who run into issues with credit card debt do so because they suffered a major financial hardship or other life event that made it downright impossible for them to pay off their debts.
However, one mistake that many people having trouble with credit card tend to make is that of being too proud to seek help. As a result, the debt continues to pile up relentlessly until it is downright impossible to get out. If this continues to happen to you, you could find yourself just getting by through making the minimum payments. In these cases, most of your hard-earned money will go towards interest alone. It really can be a perpetual cycle.
Try Credit Card Counseling
Fortunately, there are options for help that you can and should consider before you even think about giving up and filing for bankruptcy. Specifically, credit card counseling is a viable option that you should look into. By working with a credit counselor, you can get the help that you need in coming up with a reasonable budget and debt repayment plan that will get you out of debt in as short a period of time as possible. Through doing this, you can also save a lot of money in interest because you will be paying your debts off faster.
Before you decide to get credit card counseling, however, it is a good idea to know what to expect. For the most part, you should expect that your counselor will ask you to bring some basic information to your first meeting. This includes documentation of the debts you owe with information about the balance on each debt and the current interest rate. You may also be asked to bring proof of income, such as a prior year’s tax form or current pay stub. This is requested so that your counselor can compare your debt to income ratio.
Finally, during credit card counseling, you may also need to bring bank statements from the last several months. This will allow the counselor to assess your spending and help you to come up with a budget based on all of the information. Your new budget will allow you to live your life while also allocating more money to paying off your credit card debt in the process.
Through credit card counseling, you may also be able to get help in negotiating the terms of your loans with the various lenders. This can be a great way to lower your interest rates or to even get some of your debt forgiven. The end result of most credit card counseling is a more manageable debt load. If all goes well, you will even be able to avoid having to file for bankruptcy in the future.