Credit card debt out of control? Tips for Wilmington consumers
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Many Wilmington consumers are struggling with credit card debt. The average household has credit card balances totaling roughly $7,700 but those that don’t pay off their balances in full each month may have much higher debt. Most consumers with credit cards have between two and three credit cards in their wallet. Of the more than 200 million U.S. consumers that have credit cards, only 127 million carry balances on their cards. If you’re one of those, you might find yourself in trouble if the balances get out of control. Here are some approaches to make that debt more manageable.
Avoid Carrying Balances Month to Month
Magnify Money says that 42% of households pay off their credit cards in full each month. Roughly one-third of households carry balances all year long while close to one-fourth carry credit card debt month to month just some of the time. The problem with credit card debt not paid in full each month is that it incurs interest. Credit card interest can be costly, and if you ever go over your limit or pay late, that can tack fees onto the problem. Before you know it, you might wind up in over your head.
If you’re already in trouble, this piece of advice is one to file away for the future. It’s smart to pay off your credit cards in full each month and never carry balances over, so you avoid interest charges. You can easily pay online before your statement closes each month, so your statement cuts with a zero balance and no interest are owed. Wilmington consumers should find tackling credit cards every month benefits their credit score and peace of mind.
Never Swipe If You Can't Pay It Off Soon
Credit cards are a great tool to stretch your budget until payday, avoid costlier forms of debt, and bail yourself out in emergencies. However, using credit cards to purchase luxury items is a bad idea. A luxury item is something you cannot afford to pay cash for given your income and expenses. For instance, if you want a flat screen TV but don’t have the money sitting around, you might swipe to buy it planning to pay if off later. This is not a good idea because it can wind up costing you big.
Don’t Use Plastic to Keep Up with Others
It can also be tempting to use plastic to keep up appearances or live a lifestyle comparable to your friends or family. This can include eating out when you can’t afford it, taking vacations outside of your budget, or clubbing and racking up wasteful debt. Just because there’s plastic in your wallet doesn’t mean you should use it. Swiping your credit card is like taking out a high-interest loan to pay for that service, item, food, or drink. Wilmington consumers should think twice before swiping.
Cut Back to Cover Debt
If you’ve accumulated credit card debt and you can cut back on some other spending to get it under control, that’s the best approach. Simple things like not eating out and giving up vices like smoking or drinking can make a big dent in your debt. Stop using the dry cleaner, start using a car pool, and avoid Starbucks and other costly indulgences. You’d be surprised how much you can comfortably do without if it means conquering your debt. A rule of thumb is paying off highest interest card balances first.
What If You Can't Get the Debt Under Control?
In some cases, Wilmington consumers won’t be able to deal with their credit card debt without intervention. Credit card issuers aren’t known for being flexible. They want the money they’re owed. They might cut you a break on a late fee or two, but overall, you must be seriously delinquent before they will consider a compromise and even then, they may not. Companies that promise they can lower your credit card debt and get you on affordable payments make big promises.
Some of these firms charge fees illegal in the state of North Carolina and don’t get promised results. In most cases, they tell you to stop paying your bills so that they will go delinquent hoping the creditor will offer a compromise. This wrecks your credit score, and even if they can lower your balances, you might only get the deal if you can pay in a lump sum, and the fees they charge might be more than the savings. Wilmington consumers buried in credit card debt might do better with bankruptcy.
To find out more about how Chapter 7 and Chapter 13 bankruptcy can offer relief from crippling credit card debt, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 for a free Wilmington bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.