The United States is known as a nation of consumers, and the numbers surrounding credit card usage have reached staggering proportions. According to the Federal Reserve, credit card balances for Americans surpassed the $1 trillion mark in March of 2018 which is an all-time high. The average credit card balance in Maryland is currently $7,043, making it the 5th highest ranked US state for average credit card debt. Yet, despite these sobering statistics, credit offers are readily available, and most families receive multiple offers for new credit cards each week. As unpaid balances continue to roll over each month and grow, It’s no wonder that many consumers find themselves crushed by the tidal wave of their credit card debt. Let’s take a look at how to handle overwhelming credit card balances and what features to look for when selecting a new card.
Bankruptcy can put a hard stop to unmanageable credit card debt. Contact Sirody & Associates, and get the fresh start you deserve. Call (410) 415-0445.
Read The Fine Print Carefully
In any month that you do not pay your credit card balance in full, extra charges will accrue. Avoid unpleasant surprises by be asking questions and reading the fine print very carefully before taking on a new credit card. Here are some items to watch for:
- The APR or Annual Percentage Rate is the cost of borrowing with a credit card. Unless you are able pay your balance in full each month, select a card with a low APR.
- Do not open a credit card that has an annual fee.
- If you’re transferring a balance to a lower APR card, be sure you understand what your minimum payment will be each month. If you can’t afford the new minimum payment, you cannot afford the card.
- Look for a credit card that offers cash back or loyalty rewards for use of the card. With this feature, you may be able to secure a small discount off future purchases.
- Pay attention to extra fees or hidden charges. For example, sometimes new credit cards offer a low APR only to increase it significantly following the introductory period.
Reduce Monthly Payments With A Balance Transfer
For those with good credit scores, transferring a credit card balance to a card with a lower APR can be a good option to make monthly payments more manageable and help you get out of debt faster. In some cases, you may even be able to consolidate multiple credit card balances into one lower monthly payment. Here are some important factors to keep in mind if you’re considering a balance transfer:
- Balance transfers usually are offered with a promotional introductory 0% interest rate. It’s important to understand how long the interest-free period will last and also if interest will accrue during that period. If you’re not careful, you could end up owing even more than when you started.
- Credit card companies often charge a fee equivalent to a percentage of the transferred balance, such as 3%, on the total balance that is transferred over.
- Only those with a very high credit score will generally qualify for balance transfers, and even then, sometimes only a portion of the credit card balance will be eligible for transfer.
Wipe Out Credit Card Debt With Bankruptcy
Credit card debt can quickly snowball into an unmanageable amount that continues to grow every month. This financial burden can create serious stress and anxiety. In many cases, with the exception of debtor fraud, bankruptcy will completely eliminate credit card debt. As an added bonus, as soon as you file for bankruptcy, a court order called an automatic stay will immediately halt any debt collection efforts, thereby stopping harassment from debt collectors.
Learn more about how bankruptcy can help eliminate debt and give you a new financial start. Contact Sirody & Associates today. Call (410) 415-0445.