Avoiding Your Own Credit Crisis

Oh credit card bills, they come every month religiously and the balance always seems to be the same. So, how can you pay them off? Here are a couple of tips I give to anyone who asks me how to pay off their credit card debt and really live without monthly credit card bills.

Minimum Payments
Most of the time your minimum payment is likely lower than the interest amount on your credit card. Generally minimum payments can be between 2-5%. This means that if you only make the minimum payment, you may not even pay any part of the principal balance owed. Unless you pay enough to hit the principal amount owed, you will simply compound the interest each month which will then become principal the next month. At that rate, you may never pay off your credit card bill in your lifetime. So, simply put, pay more than the minimum payment due each month and at least more than the interest rate on that card. Of course this is easier said than done, but the lower your payments and closer to the minimum payment you are the longer it takes to pay down the balance. This will only prolong the agony of monthly ritual credit card bills.  
 
To Borrow Or Not To Borrow
Some people tell me they can borrow from their 401k programs or take money out of their house to pay off their debts. They ask if I recommend that they do that. Generally, I am not a fan of borrowing from retirement or taking equity from secured debts to pay unsecured debts (only as a last resort should this option be explored). Robbing Peter to pay Paul only works for so long. I have found that those who borrow from either source, not only have to repay what they borrowed with interest or penalties, but the credit card debt still ends up coming back. I do suggest considering a part time job or borrowing from a family member interest free to pay off credit cards. Sit down and figure out how much you would need each month to pay off the card. Start with your card that has the highest interest rate and consider a realistic timeframe to get the balance paid off. And, stop using that card.

Credit card debt is unfortunately a reality and way of life for many Americans. Use the two tips above and begin to dig yourself out from credit card debt and get ahold of your finances for financial freedom as soon as possible.  

Leslie H. Tayne, Esq. founder of The Law Offices of Leslie H. Tayne, P.C. a legal firm that specializes exclusively in assisting consumers and individuals with resolution options to avoid bankruptcy and resolve unsecured debts.