Credit cards are convenient but if used irresponsibly credit card debt can be stressful. If you find yourself in a situation where a large portion of your income is going towards servicing your credit card debt here is what you should be doing to get your financial life back on track.
It can be a problem especially as soon as your creditor starts to call you. It is inevitable to be indebted overwhelmingly if you ignore their alls for too long. Credit card debt calls for higher interest rates than any other loans, and late payment promises severe penalties. The longer you prolong the payment of debt the more you have to pay at the end. One should not pile up the loan payment. In the end it will not only cause a financial crisis but will also increase the stress level. What can one do to get away from this stress?
Find a credit card provider who is offering balance transfers on their card. Usually doing a balance transfer from one provider to another will allow you an opportunity to pay lower interest for a period of 6 months to 12 months. In some instances there might also be 0% interest payment for the introductory period. However, having said this be cautious of the upfront processing fee being asked by the providers. Some banks will ask for an upfront processing fee, and though this helps you avoid compounding interest, it does compel you to incur an upfront payment on the balance being transferred.
Cut it up your old credit cards
Once you have transferred your balance then do yourself a favor and cut up the cards that you just transferred your balance off of. Since those cards will be without balances, you may run the risk of accumulating more than you originally had. Remember you are on your way to restoring your financial health, so get rid of any avenues that can deter your progress, which means free credit cards.
Make a strict budget
You will need to make a really strict budget and stick to it. This will probably be very painful, as you will have to curtail any extra spending you did cut all your luxuries that you were once used to. The bright side is that this period won’t be permanent, may be long, but won’t last forever and if you follow the plan you will get through it.
Track your budget
You will have to be on top of your game, you have to continuously track how you are performing, what you can be doing better, and where you are spending. It is absolutely vital to be doing this regularly to keep a tab on where your money is going. This should help give you a clearer picture of where can further tighten your belt.
We can’t emphasize enough how problematic credit card debt can be, should you let it rack up. If you are in a situation similar to the one described above whatever you do don’t skip payments as that will ruin your credit standing which will sink you in deeper problems especially if you intend on borrowing from a bank in the future. It is always better to be honest with the institution you have borrowed from as that will at least give them the true picture of your current situation. Not answering your phone, changing your numbers is not the solution – always be honest.