Credit Card Debt- All About You Need To Know

Plastic money is in vogue in todays economy

Plastic money is in vogue in todays economy. Paying for what you buy through your credit card is fashionable and convenient. But credit cards are growingly becoming a matter of immense concern thanks to the problem of credit card debt. The problem of credit card debt arises when consumers buy something swapping their credit card but are unable to repay the money to the credit card company within the stipulated time period.

Moreover, when consumers purchase things using this form of plastic money, they actually end up paying more than they would otherwise have because apart from paying the price of the goods and services availed of, they also have to pay a complex rate of interest that keeps adding up each month and thereby the credit card debt too transforms in to a huge and often unbelievable figure.

Most customers are unable to keep a check on their purchase rate and end up over spending through their credit cards so much so that they fail to repay even the minimum amount that they need to each month. It is at such a time that they are charged additional penalties because of their failure to pay their dues. These penalties in the US range from $10 to $40.

Late payment also gives rise to the phenomenon of default payment which in turn leads to the concept of universal default. When a customer is unable to repay his credit card debt on time and becomes a default thereby, many of his other creditors may raise the rate of interest charged by them with respect to the customer even if he did not fail to pay their installments on time!

Needless to say that it is such practices that make credit card debt in to a never ending debt trap that customers cannot seem to overcome. Even if a customer could pay off the principal amount over a period of time, it becomes practically impossible for him to pay off the amount that he is expected to pay after calculation of interest rates and penalties.

Credit card debt is a chronic problem, especially in the industrialized countries like USA. In America, on an average, every individual has two credit cards each. It is obvious that customers are mostly unable to understand the complex calculations that go in to their credit card debt and feel burdened and tensed due to the humungous amounts that they are expected to pay at the end of each month in the form of credit card debt.

However, a number of debt relief programs and techniques have been introduced in order to relieve consumers of their debt burden and simplify their lives. Consumers often request for lower annual percentage rate and in the US the rate has been reduced from 16% to 10.47% on the basis of consumers requests, in the past. This helps to reduce some of the burden from their shoulders. Moreover, when the debt burden seems indomitable consumers may apply for bankruptcy in which case the credit card company is bound to either completely do away with or forgive most part of the consumers debt unless objected strongly by two or more creditors.

In fact when companies realize that a customer is nearing bankruptcy they may also make offers for a fresh deal to the consumer that help to relieve him of some of his debt burden and at the same time the companies too can maintain their profit levels.

Another form of credit card debt relief is to consolidate the different debts in to one loan and use the loan money to pay off the multiple credit card debts with different interest rates and penalty rates.

In this way the consumer is relieved from complex interest rates and penalties and has to pay off only a single loan which makes calculations easier and even penalty is not charged in this case. Also mostly, the interest charged on such loan is lower than in the case of credit cards.

It is true that credit card debt bogs most of us down but now there are many smart ways of managing your credit card debt in a way that it cannot get the better of you!

by: Natalia Kobseva

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