Too much credit card debt can be both scary and discouraging. Where do you start? What are you options? There are lots of questions, which can lead to confusion and overwhelm you.
So how can you get back on top of your financial situation?
If you find yourself unable to pay off your credit cards, here are the best options to help. But first, let’s check out the warnings signs.
Warning Signs That You Have Too Much Credit Card Debt
Getting into credit card debt is extremely easy — many times it comes at us out of nowhere. Charging purchases now, to pay off at a later date may sound good at first, but it can lead to mountains of credit card debt.
Below are some of the top warning signs you have too much credit card debt.
- Getting frequent calls from creditors wanting payments
- Only paying the minimum on your credit card bills
- Credit card limits are completely maxed out
- Been turned down for new lines of credit
- No savings or emergency fund
- Living paycheck to paycheck
- Paying bills late because you don’t have enough money
Do any of these signs sound like your financial situation? Don’t worry! There are good options available to help you get your credit card debt under control.
Create a Plan of Attack
Depending on how much you’re struggling, it’s either time to create a plan of attack or revise the one you already have. If you haven’t tallied up the totals of all your credit card accounts, now’s the time to do so.
Gather up your credit card statements and log into your accounts online. Then jot down the balances of each. You should also record the credit limit and interest rate of each account, so you can leverage this going forward.
Next you’ll want to write down the minimum monthly payments of each card, to see if you can still afford the payments or not.
Can You Still Make Minimum Payments?
If you are living paycheck to paycheck but can still make minimum payments, try using ReadyForZero. It can help you create a simple plan to reduce your spending, and combine that with earning a little side income, you’ll quickly regain control of your credit card debt.
Another option to try is calling up your credit card company to ask for a lower interest rate on each card. If they see your account is in good standing, they will be open to lowering your rate, since they’d rather do that than lose you as a customer.
Don’t worry if you can’t make the minimum payments, you’ve still got options.
Consider Debt Consolidation
If you can’t make the minimum monthly payments, you’ll need more drastic options.
It might be time to consider a debt consolidation loan. With a debt consolidation loan you’re basically combining multiple debt accounts into one account with a lower monthly payment.
This can be very beneficial because it helps streamline your debts, giving you one monthly payment, often at a lower interest rate. There are several programs available, and you can choose from peer-to-peer sites like Prosper or Lending Club, or even your local credit union.
But figuring out the best choice depends on the amount of credit card debt you have. Read up on the different types of debt consolidation programs, so you can find the best one for your financial needs.
Try a Balance Transfer or Deferment
If you have decent credit, you might want to apply for a balance transfer. Basically, you can transfer the full balance from one card, to a different one with a promotional 0% interest rate.
This strategy can literally save you hundreds of dollars in interest charges, as well as knock months off your debt repayment plan. You have to be careful though, and stick to the original plan to consistently make payments to decrease your balance. Otherwise, you’ll be in worse shape than when you started.
If you have debt from a student loan, you could qualify for temporary or permanent relief of payments. This is called a deferment, and if applicable, could excuse you from making student loan payments for a set period of time.
Again, you’ll want to use caution since this option doesn’t eliminate your debt, it just postpones payment until you can afford it — leveraging future income you haven’t yet made.
What to Do if You Need More Help
If you find that none of these options are working, you may need to talk to a financial counselor or bankruptcy attorney. Your situation is unique and having someone on your side to coach you through it, can relieve a lot of anxiety and stress.
In extreme cases your credit card debt may be too overwhelming or impossible to pay off, and a financial counselor or bankruptcy attorney will be able to help you navigate through the tough financial times.
Image Credit Mr. T in DC