Credit card debt is a major problem in the U.S. This convenient mode of payment, which tempts everyone to spend more than they can afford, has resulted in the average American carrying a debt of $8000. This debt is the outstanding amount due against the credit card, and becomes a financial burden due to the high rate of interest that is charged on the unpaid amount. This debt poses a threat to other financial commitments and since it is often incurred for trivial and non-essential items, it is actually unnecessary debt.
There are a few signs of warning that reveal when an end must be imposed on credit card spending since the debt is becoming unmanageable. Some of these are:
- All savings have been used up. When there are no savings left, there is nothing to fall back on, beyond the monthly income.
- You are only able to pay the minimum amount due month after month and the outstanding amount has crossed five digits.
- You have more than one credit card that has reached its credit limit.
- You are trying to delay making payments of bills of the cards and other utilities.
- You are contemplating cash advances from the bank to meet your payment deadlines.
- You have been denied credit by the bank.
- Expenses are become a topic of argument and anger with family members.
- You dodge phone calls from credit card companies
- You are under stress and have sleepless nights thinking of ways to raise funds.
This dismal situation has not surfaced overnight. It is obviously the outcome of months and years of extravagance and reckless spending on avoidable luxuries. This is perhaps the biggest drawback of having a credit card. For as long as cash payments were the norm, people were cautious about buying luxuries like a Chanel bag or similar brands. But the credit card in the wallet tempts too easily and few resist the temptation. The wave of consumerism and brand flaunting has led to this credit card debt syndrome.
But some corrective measures can be taken as a way out from credit card debt, but it requires strength and determination by all family members responsible for this credit card debt. Some useful tips to salvage the debt situation include:
- Make a firm effort not to use your credit card. This may mean locking them in a cupboard, since they cannot be returned to the issuing authority till the dues are cleared.
- Resist going shopping in the first place except for basic necessities.
- Refuse invitations to exhibitions, events or brand launches.
- Make a budget which includes minimal expense and more savings.
- Use savings to make bigger payments to reduce the outstanding amount on credit cards.
- Opt to consolidate credit cards into one-this will mean transferring all the debt of multiple credit cards into a single card with a bigger debt.
- Keep cancelling cards as dues are cleared.
Credit card debt can spiral into a big unmanageable problem if not addressed at the right time.