Large Amounts of Credit Card Debt

Large amounts of credit card debt can make it difficult to manage your monthly finances. Credit card debt can be difficult to manage since it is a revolving line of credit, which means your payments can become higher over time. Making the minimum monthly payments will not help you get rid of the debt. You need to make a plan and work to get out of debt.

Dangers of Large Amounts of Credit Card Debt

Large amounts of credit card debt can lower your credit score. This will limit what you can borrow in the future when you want to get a car or buy a home. The interest rate on credit card debt is higher than most other types of debt, which can make paying off the debt even more difficult. The payments and interest can limit the amount of money you save and prevent you from building true wealth. Additionally, it may limit you from leaving your current job to pursue your dream of opening your own business or other goals.

Debt Payment Plan

The best way to get rid of credit card debt is to set up a debt payment plan. List your debts in order of highest interest rate to lowest. This is the order you will pay off the debts you owe. It allows you to save money on interest. Find extra money in your monthly budget to pay towards the debt. Apply the extra money to the first debt on your list until it is paid off. Then pay off the next debt on your list. Stop using your credit cards or you will not be able to pay off the debt. You can cut them up or put them some place safe, so you do not carry them with you anymore.

Help Dealing with Credit Card Debt

If your debt payment plan is too difficult to follow or if cannot find extra money in your budget, you can consider a few different options. A credit counseling service will help you create a budget so you can find extra money in your budget. They will negotiate lower interest rates with your creditors, and you will make monthly payments to them instead of to your creditors. A consolidation loan will give you money to pay off all of your credit cards. The loan usually has a lower interest rate, and a set monthly payment, so you make progress towards paying off your debt. Do not use a second mortgage or home equity loan to do this, since it will tie the debt to your house. Debt settlement is an option if you are behind on your payments. Credit card companies may accept a lower payment if you pay a large lump sum in full to clear the debt.

Bankruptcy

Bankruptcy is another option to get out of large amounts of credit card debt. This does have a serious impact on your credit score, and can make it difficult to borrow money for a few years. It should be a last resort to getting rid of your debt. Some bankruptcies have you pay a monthly payment to your creditors, while others will clear the debts completely. It depends on your current financial situation and the assets you currently have. Consult a bankruptcy lawyer if you are considering this option.