Credit Card Tutorials

Using Credit Cards To Achieve Debt Relief

We are seduced almost everyday by ads promising a low-interest and even no-interest credit card. Running up debt and then “charging it” — is a typical American way of life, some people even feel almost unpatriotic if they don’t have a credit card, as a significant percentage of US economy is run by consumer debts. We continuously get solicitations in our inbox telling us that we are pre-approved for thousands of dollars worth of credit card package. We see TV spots urging us to purchase a houseful of furniture and appliances with no interest for a one-year credit, or a brand new car with “low interest and no money down”. Sometimes you are allowed to skip the payments for a few months.

For those who have recently filed for bankruptcy? They can receive credit card applications quite easily, get offers from car companies and also mortgage brokers and banks. For these reasons, credit cards are often used in debt relief efforts.

There are a few situations where this could be a workable plan. If you have fallen into a troublesome payday loan trap and have thousands of dollars of debt in interest and fees you couldn’t repay in time, then it would be better to pay it off with a low-interest credit card. And if you have a few maxed out credit cards but still have an acceptable credit score, you might qualify for a credit card that charges nothing for a year when you transfer the debt into it.

If you choose to use credit cards to achieve debt relief, use self-discipline and good sense. Don’t be foolish by shopping with the new credit card. The minute you are approved, transfer the debt you’re paying off. You shouldn’t even put the credit card in your purse or wallet; hide it in a place that you can’t easily reach and forget it’s there. Some people even go one step further by cutting the card after the balance is transferred. Its sole purpose is to assist you get out of financially draining debt and not aggravate it. Also you will want to be sure that you can afford the debt payments. If you apply for a no-interest card, you need to read the fine print. Certain companies will charge you a substantial annual fee. Others will allow the no-interest period to carry on for only a year. It means that after a certain period of time, you’ll be charged with interest rate. Make your plan to pay off your credit card debt before the no-interest period expires.

Using credit cards for debt relief is always a tricky business. Your new card with no balance in it can be so alluring. If you’ve found it too easy to overextend yourself financially, it is better make a definite plan. Create a workable budget including the new obligation of paying off the credit card and do your best to stick to it. Cut back on unnecessary expenses that quickly get out of hand, for example spending $15 a day for lunch in your favorite fast food restaurant instead of bringing home-cooked food to work, making frequent stops at a favorite cafe for an espresso and cake, or even see the latest movie instead of renting the older one.