Credit Card Debt

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Credit card debt is as easy to accumulate as a cold. At first, you may think that you are signing up for a card that you will be able to maintain. However, over time, the ever-increasing credit limit can be all too alluring when you are out on the town and spot a new sofa, high end dress or big screen tv. Once you are close to your limit, outside fees, a missed payment, and accumulating overcharge and late fees can really land you in serious credit card debt. Borrowing money via a credit card is not easy: Instead, it can be very expensive. However, once you get into debt, it can be incredibly hard to get out of it. The following includes some basic information about credit card debt and why people end up in it.

Most people end up in credit card debt because they simply do not notice that things are slipping out of control. A few shopping sprees or even an emergency big purchase like new tires can really put a person in a financial hole that is difficult to get out of. This is why so many people end up in bankruptcy because of credit cards. As soon as one is a couple of payments late, additional fees result in balances increasing more and more. Thus, even when a person pays their minimum payments on time, it can seem as if the overall balance barely decreases and may in fact even increase.

Assess Your Financial Situation

If someone wants to get out credit card debt, they really need to find out what their financial situation is like. This means taking the time to see what one’s overall balance or debts are like as well as the interest rates. Knowledge is power when it comes to such debts. The more one knows about what they owe, the easier it will be to make a plan to get out of debt.

This means that people need to know exactly which charges are coming when. This means reading the fine print of all credit card company correspondence. The more you know about fees, the better able you will be to make smart decisions about payments. Sometimes, you will have to dig in to pay more than a minimum payment so that you can truly get out of debt.

In fact, if you only pay the basic minimum, you could be tied to a credit card company for a long, long time. This will not do you any favors, especially if you only had only planned to use the card for emergencies. Do not fall into the trap of what is easiest. Instead, if you push yourself to pay this card off fast, then you can be sure to turn your financial situation around fast.

Credit card debt is not just for people who fill their closets with shoes or overspend. Instead, it is something that everyone from soccer moms and college students to the elderly can fall into. Once you are in this situation, it is important to face it head on. Trying to hide from it will do little good. Do not procrastinate: Get to work fast and you will surely be able to get out of this financial hole for good.

Bad Credit Card Debt Statistics

United States (July 2008) $962 billion

United Kingdom (March 2009) £64.7 billion

Australia (2007) $41 billion (AUD)

Credit card debt is said to be higher in industrialized countries. The average U.S. college graduate begins his or her post-college days with more than $2,000 in credit card debt. The median credit card debt in America is $3,000 and number of cards held is two

Relieving Credit Card Debts

Account holders can request a reduction in their annual percentage rate (APR). A survey conducted by the U.S. Public Interest Research Group in March 2002 found that among its fifty participants, including people of all credit backgrounds, who contacted their credit card issuers, 56 percent received a lower APR. On average the percentage went from 16 percent to 10.47 percent.

Bankruptcy Concerns with Respect to Credit Cards

Sometimes the late fees, high annual percentage rates (APRs), and universal default overcome consumers who frequently do not pay off their debt, and the customer declares bankruptcy. If a customer files for bankruptcy, the credit card companies are required to forgive all or much of the debt, unless such discharge of debt is successfully challenged by one or more creditors, or blocked by a bankruptcy judge on legal grounds irrespective of creditors' challenges.

Because forgiveness of debt reduces likelihood of profit and continued survival, the companies are generally willing to offer another deal to the consumers in danger of bankruptcy. This deal consists of reduced APRs, removal of past late fees and penalty charges, and reaging the accounts so that the credit agencies see them as late accounts.

Political Aspects of Credit Cards

Some credit card companies made lobbying efforts at the federal level to tighten American bankruptcy law, making it harder to have credit card debts canceled. Recently it was reported that Americans are paying off credit card debt more frequently, and this was attributed in part to the bankruptcy legislation supported by the companies.

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