Getting Out Of The Credit Card Trap

Banks and other companies that provide credit cards have simply made it much too easy for you to acquire massive debt that you cannot afford to pay. The lenders rely on the fact that the majority of people do not have a personal budget that they live with.


Many people have several credit cards that they buy whatever they want with whenever they want. These people pay the minimum balance each month and spend their lives in debt. The interest on the amount that you owe can be as high as 21 percent. This means your personal debt keeps getting bigger every month.


The banks are not totally at fault. You must accept your part in the debt situation that you have produced by overusing credit cards and make a plan to get yourself out of debt. This will hurt some in terms of finances and emotions but the benefits are huge.


You have to create a personal budget. You must figure out how much you pay for rent, for a mortgage, for utilities, and for food. You have to add the minimum payments that you are making on all of your credit cards to the budget.


Your next step is developing a repayment plan. The repayment plan should have the goal of making you completely free of credit card debt as soon as possible. This is where most people stop and continue to amass credit card debt.


You must understand that credit card debt is really keeping you from a better life. Many companies check credit scores and do not hire people with high credit card debt. Credit card debt can prevent you from providing an education for your children. A huge credit card debt will prevent you from getting a loan for a home.


Your first step is to pick the credit card that you want to keep for emergency use only. Pick the one with the lowest rate of interest and the highest rates of incentives like cash back. Cut up all the rest of your cards. The physical act of cutting the cards up makes you feel like you have taken control of personal debt.


You have to cut your spending. Reduce the number of channels that you get on your television. Drop the satellite radio in your car. Live with the clothes that you have.


If you can borrow the money from a relative to pay off your credit card debts then do it provided that the interest you pay is low. You still need to cut expenses and avoid using credit cards.


Avoid bank programs and other companies that offer you an “easy” way out of credit card debt. You are simply paying a person to extend the length of time you will be in debt.


The time that it takes to get out of credit card debt will teach you how to live within your means so that your financial position and credit rating will be better than they ever were before.