Pros and Cons of Credit Cards

In today’s economy using a credit card or a charge card to pay for merchant goods and services is a fact of life. Credit cards are convenient as you don’t have to carry a wad of cash all the time. If you don’t have money in your account or cash in your checking account, these cards help you to buy essential commodities and also in an emergency to pay medical bills etc.

No doubt credit cards can be a very helpful financial tool, but it can be challenging too. Compared to cash credit cards have many benefits like:

  • It can be replaced easily when lost.
  • It provides a useful written summary of your purchases.
  • The rewards program on credit cards can help you accrue points towards travel and merchandise.

But the negative aspect of credit cards is that it is easy to abuse them and makes them a very popular sinkhole. People spend more money when they use credit cards and credit spending gets out of control. It is not only the financial irresponsibility that can lead to credit card debt, but according to a new survey by Lending Tree, debts more often comes from just trying to get by and that “making ends meet” was the main reason consumers’ racked up bills they couldn’t pay. People are overwhelmed by the sheer amount of payments they have to keep up with every month.

How Can I Get Out of Credit Card Debt?

Are you drowning in credit card debt and looking out for a solution?

If you are at a point where you can pay only minimum payments and are concerned about interest charges adding up and find yourself laboring under a load of credit card bills you should not despair. There are different ways you can get control over your credit card debt:

  • You have the option to reduce your credit card debt as quickly as possible by paying off as much as you can afford every month as bigger the balance the greater the amount of interest will be added.
  • You can pay off your credit card debt on your own by putting together a repayment plan depending on your financial situation. The first step is to know how much you owe and how long will it take you to pay it back. You could use a debt calculator to determine the amount of interest you’ll pay as well as how many months it will take for you to be free of credit card debt.
  • There are two other methods available to get rid of your credit card loans that is snowballing and debt stacking. The snowballing method was invented by financial expert Dave Ramsey. You order your credit card debts from one with the lowest balance to one with the highest. In this method you pay the credit card debt with the lowest balance first and then move to the next one till all your credit card debts are paid. The other method is debt stacking which is just the opposite of the snowball method because it focuses on ordering your credit card debts from the highest one to the lowest. In this method you start by paying your highest credit card debt first and then move on to the next highest till all your debts are paid.
  • You can also negotiate for lower interest rates with your credit card companies and work out a debt consolidation loan to pay all your credit card bills and walk away from debt.

Whatever option you select you need a lot of planning and discipline to execute them .The best option is Credit Card Consolidation.

What is Credit Card Consolidation?

If you are juggling with several credit cards and struggling to pay monthly payments credit card consolidation is a very effective way of paying off your credit card debts.Consolidation means that all your debts on various credit cards are consolidated and rolled into one monthly payment. It may be the easiest way to simplify or lower payments on your multiple credit card loans, as it tends to have lower interest rates and allows the borrower to make only one payment monthly instead of many. Besides this type of loan, the payments and the length of the loan are pre-determined and it may also result in overall lower monthly payments. It will also establish a good credit history if paid back as agreed. These loans are available from credit unions, banks and other financial institutions. The potential disadvantages of credit card consolidation loans are that:

  • Some type of collateral and a co-signer may be required before your loan is approved.
  • When you consolidate your credit card payments into one loan you are taking out a new loan and will have to repay your new loan like any other loan. However taking out a big loan can be tricky.
  • If you do not have a good credit score you may not qualify for a consolidation loan or if you qualify you may not get competitive interest rates.
  • You may able to secure a loan with low monthly payments but it will be at the expense of a much longer repayment period.
  • If you opt for a consolidation loan but keep making more purchases with your credit cards you will probably not succeed in paying down your debt.

If you are struggling with your credit card debts you will need the help of an expert. We encourage you to contact our professionals at Royal Debt Relief so that we can plan out the best credit card relief program to suit your financial needs.