subject: Credit Card Debt Basics- How to Avoid Paying Credit Card Debt [print this page] In this day and age credit cards are a necessity, not just a luxury.
Almost everyone has a credit card, or at least wants one. Many people have more than one. The credit card industry is salivating over the potential profits to be made of this massive move towards more and more credit, and their profits are skyrocketing.
Credit cards are great, until you realize that it is actual a real debt that you're incurring. It's so much easier to get started with credit cards, and build up large credit card debts, than it is to get out of that debt. After all, the credit card companies succeed when they get to collect higher and higher interest and fees, than if you pay them off.
What many consumers have found is that even the government has changed the rules against you. What used to be a viable option if credit card debt became unmanageable was to declare bankruptcy. Now, it appears that the new bankruptcy laws make it almost impossible to escape consumer debt. And that's too bad, as there is almost no escape from credit card debt when that was not the case just a few years ago.
But not all credit card debt is a problem, let's see what happens when it is a problem.
Credit cards by their nature offer the consumer the ability to use the credit card for purchases rather than cash. The credit card company will determine a certain amount that the borrower can use, this is the credit limit. Depending on how much you use the card, and how quickly you pay that amount back determines your credit card debt.
Paying off that credit card debt can be a little challenging for people not used to managing their finances. Because of the different terms of the credit card companies, many consumers find their purchases take years to pay off, and can pay more than double or triple what the original purchase cost in interest charges.
Where trouble occurs is when payments aren't made on time. Many credit card companies will instantly increase the interest rates, going as high as 25-30%. The fees can be astronomical as well, $30-40 fees are common. The problem is these higher fees target the consumers that are least likely to be able to afford them.
Most consumers won't run into these problems with credit card debts. As long as you manage your credit card debt properly, there is no reason to think that your credit cards should affect you negatively in any way.
Credit Card Debt Basics- How to Avoid Paying Credit Card Debt
