What to Do When Your Credit Cards are Out of Control

Do you love shopping, clubbing, exploring places, and eating out at top-notch restaurants? If so, then there is a great possibility that you have credit card debt. As long as your credit card debt is manageable, there is no problem. But when your credit card debt goes out of control, your life becomes messy due to the following reasons:

  • A low credit score and rampant collection calls
  • Lawsuits and wage garnishments

You have 3 options now.

  1. Live with your credit card debt and collection calls.
  2. Face wage garnishment months after months.
  3. Take steps to pay off credit card debts quickly.

The first 2 options won’t stabilize your financial life or give you mental peace. But the third option will help you to get out of debt and lead a stress-free life again. So, let’s focus on the third option and find out the various ways to pay off credit card debt.

3 Prudent ways to fix your credit card debt problems

Here are a few ways to tame your unruly credit card debt and bring tranquility in your financial life.

  1. Take advantage of debt consolidation services: When you don’t know what to do with multiple credit card debts, consider using debt consolidation services. They can help to cut down your high-interest rate and lower the amount you have to pay every month.

The other benefits of consolidating debts are:

  • No penalties and late fees
  • More savings due to lower monthly payments
  1. Settle your unsecured credit card debts: If you want to save on the outstanding balance, then you can go for the credit card debt settlement option. In this credit card debt relief option, your total payoff amount is slashed by a big percentage. The percentage usually depends on the following factors:
  • How much you owe on your credit cards
  • The temperament of creditors
  • The efficiency of the debt settlement company

A special note:

As far as debt consolidation and debt settlement are concerned, you can do it on your own or you can get professional help. Both have pros and cons. You have to analyze them in detail and then make the final decision.

When you work with a professional debt relief company, you get the following advantages:

  1. You’ll get expert advice from the debt counselors/debt negotiators.
  2. You can relax as the debt relief companies will do all the negotiations.
  3. You can live without any stress as there will be fewer collection calls.

When you consolidate or settle debt yourself, you enjoy the following benefits:

  1. You save money. Professional debt relief companies charge a fee for their services.
  2. When you consolidate or settle debt yourself, you don’t have to pay any fee.
  3. Some creditors prefer to work directly with consumers rather than debt relief companies. So, they might be easier with you.

You get a psychological boost after grabbing a good settlement deal.

But as it has been mentioned before, both have some disadvantages too. When you use professional debt relief services, you can get scammed if you’re not careful. Likewise, you won’t be able to save a lot of money if you’re not a good negotiator.

  1. Follow the debt avalanche method wisely:If you don’t want to consolidate or settle debts, then there is yet another way of tackling unruly credit card debts. Pay the minimum amount on all your credit cards every month. But at the same time, make an additional payment on the credit card with the highest interest rate every month.

Continue making additional payments on the credit card with the highest interest rate until it is paid off. Once it’s paid off, you can make additional payments on the card with the next highest interest rate while making minimum payments on the other card. And, the process continues until all your credit cards are paid off.

A realistic scenario

Here we have included other types of debts (apart from credit cards) also for better understanding.

Type of debt Outstanding balance Interest rate
Credit card $8000 18%
Personal loan $6000 10%
Payday loan $3000 350%

In a debt avalanche method, your first goal is to pay off the payday loan since it has the highest interest rate. Your next goal is to get rid of the credit card. And, finally, you need to focus on the personal loan.

This is a complete DIY or do-it-yourself method where you can decide how to go ahead. Once you pay off one debt, you get a psychological boost. You get motivated to kick out the remaining debts.

In Conclusion

Credit card debt can go out of control when you’re focused only on spending money. Once it goes beyond your control, you have to stop splurging and focus on saving money. You can follow the aforementioned ways to free yourself from the shackles of credit card debt.

Leave a Comment

Your email address will not be published. Required fields are marked *