Credit Card Debt

The Worst Ways to Pay Off Credit Card Debt

Credit card debt is a major problem that plagues so many Americans, with the total amount of credit card debt estimated to be over $870 billion in total. According to data from Experian, the average credit card balance is $6,629. If you are struggling with credit card debt, certain behaviors can be counterproductive and make the problem worse when trying to pay down a credit card balance.

Skipping Payments.

One of the worst things a consumer can do is to skip a credit card payment, intending to pay it next month or forgetting completely. When it comes to debt- unfortunately, out of sight, out of mind does not work. Missing just one month’s payment can result in a sharp increase in interest rates, as well as late fees. The higher the interest rate is, the less likely it is that the cardholder will make any progress towards paying off the principal every month.

Making Only Minimum Payments.

If the cardholder only makes the minimum payment every month, he or she will never make progress in paying down the principal. If the balance is particularly high, as well as the interest rate, the minimum payment is probably only going towards the interest every month, not the principal. All the cardholder ends up doing is paying the interest incurred that month. It pays to add more to the minimum amount every month. Even if the person is not paying it off in full, at least he or she is making a dent in the total principal owed.

Not Making Lump-Sum Payments.

Many individuals avoid ever making lump sum payments on their credit cards, thinking that additional money coming in should go toward other expenses. They may also consider putting a lump sum of money they receive towards a different type of debt. However, credit cards carry significant interest rates, as opposed to other debts, such as car loans or mortgages. Interest accrues every day, and any large lump sum of money reduces the overall balance, thus reducing the amount of interest calculated that month. If you get a tax refund or bonus, it may be beneficial towards eventually paying off your credit card debt by applying all or at least some of what was earned towards the credit card balance.

Not Making Payments in Between Statements.

While cardholders are only required to make payments every month, there is absolutely nothing stopping a cardholder from paying more in between statement dates. Making extra credit card payments has been proven to be one of the better ways to make progress towards paying credit cards down faster. Make sure to tell the credit card company in writing, however, that any extra payment is to go towards the principal balance only.

Not Consolidating Credit Card Debt.

Many people have more than one credit card, and while having more than one card is not always a bad thing, it can make paying them down difficult, especially if they each have a large balance. If the person only ends up making minimum payments continually on each card, he or she is only paying interest and simply carrying those large balances from month to month in the long run. Taking out a personal loan to pay down credit card debt or consolidating debt into one card with a low or zero interest rate can be beneficial, so long as the individual is able to pay down the debt before the promotional period expires.

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges.  It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.

Filing for bankruptcy is also a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills and personal loans.  There are certain qualifications a consumer must meet in regards to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at

Source: Forbes- Five Worst Ways to Pay Off Credit Card Debt.


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