Why consumers should avoid self payment

Before we touch on this topic, we would first like to say that paying credit card debt on your own is not necessarily a bad thing. However, if done incorrectly it can be indeed a horrific nightmare. When dealing with credit card debt, its important to understand that these banks issue these lines of credit for one purpose and one purpose only, and that’s to make money. Given the banks don’t profit, there would be no point in providing credit cards to the mass public.

When dealing with credit card debt, its important to never exceed 20% of the allowed credit limit. Unfortunately, many consumers tend to max out their credit limit or come within 10% thereof within a matter of months. The programs credit card help assists consumers into work to fight the creditors and their fee structure. Given the consumer cannot pay at least three times the minimum payment, paying this debt on your own is a ticking time bomb awaiting detonation.

Interest rates and compound interest

Little do consumers know, but the Roman Empire once outlawed compound interest as it was a method lenders used to enslave their people. In a similar situation today, consumers are making minimum payments most of which does not go toward the actual balance due to rising, compound interest rates. The average consumer has around $15,000 in unsecured credit card debt, with an interest rate of 19% or greater. Given the consumer is making the minimum payments, they would be in debt for well over 20 years. It’s for this exact reason as to why the Federal Trade Commission enforced those new guidelines which now require lenders to show the estimated payoff length on your credit card statements. 

When considering debt consolidation as a method to pay back credit card debt, this program works only to reduce interest rates, and finance charges. In no way does debt consolidation adjust the actual balance owed. Given that’s the option you wanted to consider, debt settlement would be your best bet. The fact of the matter is, if a consumer is not paying at least two or even three times the minimum payments, these balances will never move. If you cannot afford to exceed that amount, consider debt consolidation as a method to pay back credit card debt before its to late.

Other finance charges when paying on credit card debt

Another tactic creditors like to put against consumers, is the typical finance charges. Whether it be a $35.00 late fee, $35.00 over limit fee, annual fees or god forbid some other frivolous fee, these types of charges must stop. To top this off, these fees do have a tenancy to snowball and roll onto one another. Meaning, if you have a $35.00 late fee, which puts you over the limit a $35.00 over limit fee may be imposed.

Now to work against this, this leads us back to the topic listed above. If consumers are not paying at least two or three times the minimum, paying off this recurring type of debt will be extremely complex.

Debt enslavement for far to many years

With the addition of the interest rates and finance charges explained above, this leads us into debt enslavement. When considering self payment as a means to pay off credit card debt, understand that these creditors will use tactics such as the compound interest and finance charges, to hold you down. When making a minimum payment of $200 on a $10,000 balance, only to see it go down $50.00 (if your lucky), is ridiculous. Programs such as debt consolidation (also known as credit counseling), work to reduce or eliminate many of these fees.

In summation, for consumers whom feel as if their balances are not moving considering debt consolidation is not a bad idea. The credit card debt consolidation programs can and will save you a great deal of money. With our debt education courses, we can assist in the reduction of minimum payments and finance charges. Contact one of our debt educators today for a free, no obligation discussion for true credit card help.