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Many Americans struggle with credit card debt, and it can accumulate quickly if left unchecked. While it’s easy to spend on plastic, paying it back can feel like an uphill battle. Many struggle to repay their debts and regain financial footing. Below, learn more about credit card debt and how you can recover. 

What Is Credit Card Debt?

When you apply for and receive a standard credit card in the mail, all you’ll need to do is call the company to activate it. Then, you can spend all the money that they loaned to you monthly, and at whatever frequency you’d like. Unfortunately, this freedom is what leads many borrowers to struggle with credit card debt. After you’ve spent the money, the lender will expect you to return it. If you just let the debt sit on the card, the interest rate will cause your balance to rise steadily, and your credit score will fall, even if you’ve cut up the cards or set them in a drawer. A poor credit score can impact your ability to take out loans, rent an apartment, or buy a car. 

Depending on your credit score, your interest rate may be anywhere from 12% to 29% of the money you spent, so your balance continues to increase each month. Even if you’re making a minimum payment of $60 each month, you might be charged $40 in interest each month. As a result, you’re only really paying off $20 of debt each month. 

How Can You Mitigate the Issue?

credit card debtTherefore, the best way to combat credit card debt is to pay more than the minimum payment each month. You don’t need to pay the balance down to $0, just make sure that you’re only using 30% of each line of credit at a time. For example, if you have a credit card with a $2,000 spending limit, you’ll never want to use more than $600. 

Once you get each card down to under 30%, your credit score will increase, which may have a positive impact on your interest rate. This means, you’ll get charged a smaller percentage of interest on your revolving balance, so it doesn’t pile up at an unmanageable rate.

If you’re having a hard time even making the minimum payments, you may need to transfer your balances to a lower-interest credit card. Or, you could take out a loan with a lower interest rate to immediately pay off your credit card debt. In extreme cases, you may need to file for bankruptcy to wipe out your unsecured debts.

 

If meeting your minimum payments is a difficult task, turn to Buypower Eminence for guidance. This Lancaster, PA, team specializes in helping borrowers find a way out of credit card debt, whether through credit counseling, debt settlement, or score improvement. With their help, you can avoid financial stressors and put yourself in a better position to meet your goals. To learn more about their services, visit the website. You can also call (833) 428-9769 to speak with a credit card debt expert today.

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