Managing Credit Card Debt

Credit card debt may be hard to manage, but it is possible to eliminate credit card debt without bankruptcy. Unfortunately, some commonly used debt help can be even worse than the actual debt. Here are some gentler debt relief methods, as well as the ones that you should stay away from.

Payday loans may sound like a good solution when you are desperate for money, but they are set up so that it’s next to impossible to get out of debt. Many people end up borrowing against their pay check, only to pay it off and then need to borrow again. Interest rates are ridiculous- payday loans should be used strictly as a last resort.

Many people end up raiding their retirement fund to pay their credit card debts, but that isn’t such a good idea. Any amount you withdraw from a 401k or other retirement plan is subject to penalties and taxes, so if you do need to dip into your retirement savings, take that fact into consideration. You will need to put that money back into your retirement fund within five years, but even with all that, retirement savings loans are far preferable to payday loans.

Cash advances are another “robbing Peter to pay Paul” proposition. People take out advances on one credit card to pay off another, which is counterproductive. Cash advances carry much higher interest rates than regular purchases, and you may end up owing even more if you do this frequently.

So, how SHOULD you pay off your credit card debt? You should shift your finances around and do your best to make more than the minimum payment each month. If you can’t do it, but you do know that you can pay the debt within a year, you should transfer the balance to a zero-interest card. Make sure to pay the balance before the promotional period is up, or you will get slapped with a much higher interest rate.

If you own your own home, you can always take a lower-interest home equitly loan. There are some risks to taking this step, but you cannot lose your home because you have credit card debt- you can be foreclosed on if you default on your home equity loan though.

To read the top credit card debt news storiesand get useful tips and information, visit creditcarddebt.org today.