If you use credit cards frequently, it should be clear how useful these assets are these days. We need them for various uses like online shopping. They’re simpler and more efficient to use than cash, and they can help us keep track of our spending. A significant point to remember is that these cards accrue debt quickly when used, and sometimes this can become a nightmare. Unless you know how to manage credit card debt, it can be overwhelming. Do you have any questions about credit card debts? Read on to find answers to the top five questions people ask on the same.
Which Credit Card Should Be Paid Off First?
Sometimes you might be carrying numerous credit card balances every month and wonder which card should you pay off first. If that happens, an efficient plan is required. Should you clear with the credit card with the highest interest rate first? Probably yes, but it’s not a matter of numbers. The best thing to do will be to apply the debt snowball method, which entails paying off the smallest balances first then moving to larger ones.
When you clear the smallest credit card balance, which will be easy to tackle, you’ll be motivated to proceed to the next. Repeating the procedure is a sure way of knocking off one card debt after the other until you finish all of them. If you begin with cards with the largest debts, it might be challenging and get you discouraged in completing the payments. With the snowball method, list all the debts from smallest to largest. When paying, ensure much money goes to the smallest debt while making minimum monthly payments for others too. Do so until that one is paid off and proceed to the next.
Is Credit Card Debt a Bad Idea?
If you’ve used credit cards for some time now, the answer may be clear to you, depending on how the cards work. What if you’re new to the game? Most of us know that credit cards are a normal and routine part of life. When beginning to use them, it seems fun and starts simple. You can cover emergencies and shop whatever your card can afford; it doesn’t look like a big issue. Even so, sooner, the minimum payments begin to grow and become hard to pay off.
Within a short period, you have considerable debt. Do you still wonder if a credit card debt is a bad idea? If you don’t possess one, it’s okay. You can survive on the little earnings and save whatever you can. But, if you own a credit card (s), keep it up because there are benefits to enjoy from them like rewards/hacks. Only make sure to follow the right way of debt payment and be debt-free. You can research various ways to manage credit card debts and get rid of them. The decision to have a credit card debt or not is entirely personal.
What Happens If I Don’t Pay My Credit Cards Debts Anymore?
You can become overwhelmed with the debts and give up paying them. What happens if that occurs? There are consequences, and these apply even if you only forgot to make a payment. Late payments will show up in the credit report after 30 days of the default. After 60 days of non-payment, you’ll be penalized for a higher APR and have to restore the original rate by making six consecutive payments.
Finally, if you completely fail to pay off a credit card debt, the credit card issuer will freeze the account, charge it off, and submit the reports to a collection agency. That will occur after six to nine months, depending on the issuer. After that, legal action could be taken against, resulting in worse consequences. All that can be avoided if you plan well to clear your credit card debts. Please consult a financial expert on how you can deal with credit card debts and get rid of them.
How Long Does It Take to Pay Off a Credit Card Balance?
Unlike bank loans or other debts that you may owe people, credit card debt revolves. That means there’s no specified condition determining how long paying it off will take. Creditors always rejoice when clients meet the minimum payment requirements. Better still, you can always pay the debts faster to save more money and limit debt-related risks. Doing so requires keeping your account up-to-date and not falling behind. Use the available ways to avoid penalties like high APR and getting your account sent to collection agencies.
What If I Pay Off My Credit Card Debt Every Month?
Yes, everyone can do that. Even if someone might feel there’s no big deal provided that he can pay off the balance each month, shrewdness is necessary. The big deal is that credit cards have an average balance, you can lag on bills, and research indicates more spending when using credit cards than cash. Thus, even for anyone that thinks of efficiently managing the amount of money spent, there are pitfalls. Late payments and penalty fees can grip us and pile up.
There’s absolutely no perfect way of credit card utilization, and anything can happen to your disadvantage. The credit card companies need profit, and that means using their services isn’t a smooth course. They know that you’ll spend more and accumulate much debt. The result? They’ll benefit while you pay them the balances with high interests.
So, even if you can pay off the debts each month, a single missed or non-payment is enough to devastate you. It can steal more than your paycheck and put you into serious money problems. Why not check this helpful site loan advisor to see how best you can deal with this issue?
The Bottom Line
Credit cards are useful to people in many ways. You can purchase things with them even if there’s no money in the account or cash in the pocket. We love credit cards and would want to use them more and more. But, there’s the sad news; credit card debts and their frustrating nature, mostly if not correctly handled. Fortunately, you can overcome them. Consider the above questions and many others about credit card debts before you move on.