Five Bad Things About Credit Card Debt, Consumer Debt Solutions, California

According to the US Census Bureau, the average credit cardholder carried $5,100 in credit card debt in 2009 with that amount is expected to increase to $6,500 in 2010. You can see how this multiplies by the number of cardholders in your household. Considering the nature of credit cards, that’s a high balance to carry. Many debtors are in no hurry to pay it off because they don’t see the disadvantages. If you need some convincing to get rid of your credit card debt, check out these 5 things that make debt so bad.

It’s expensive. Carrying credit card debt is costly. When you signed up for the credit card, you agreed to pay monthly finance charges to the credit card company for every $1 you didn’t pay before the grace period. As long as you carry credit card debt, you’ll continue paying those finance charges to the credit card issuer just for the convenience of holding that balance. Most debtors end up paying far more in interest charges than they charged in the first place. There are better ways to put your money to work for you.

It may take years to repay. If you are in the habit of making minimum-only payments on your credit card debt, it will be several years before you ever pay off the balance. For example, if you have a credit card with a $1750.00 balance at 23.4% interest rate, it would take you approximately 15 years to pay off the balance making minimum payments. Could you imagine spending the next 15 years paying off a $1700 debt? By that time you will have long forgotten what you even purchased with the credit card.

You may not get loans. The more credit card debt you have, the less attractive a borrower you are. Lenders don’t like loan applicants to have high credit card debt. If you are thinking about getting a mortgage loan or an auto loan think again. You will have to drastically reduce your credit card debt before a lender will approve you. That’s because a high level of credit card debt would make it difficult for you to repay your loan. Lenders want to be paid and if it looks like you won’t be able to pay, they’ll turn you down.

You may have less money for other things. Having credit card debt reduces the amount of money you are able to spend. You must send money to the credit card issuers every month. As long as you have credit card debt, you will experience a decrease in your cash flow that will limit the amount of leisure spending you can do. The faster you get rid of your credit card debt, the sooner you will have more money for spending, saving, and investing.

It’s hard to get rid of. The funny thing about credit card debt is that it’s so easy to rack up but more difficult to pay off. Have you noticed the number of credit counseling, debt consolidation, and debt settlement companies there are? There are so many debt management companies out there because there is an enormous and increasing population of consumers who are overwhelmed with credit card debt.

Credit Counseling is NOT factored into your FICO® score! This info comes straight from the credit scorers to you!

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