Credit card debt has traditionally been one of the more difficult consumer debts to conquer. This is in large part because most credit card balances come with significantly high interest rates. The larger a consumer’s balance gets, the more difficult it can be to tackle the debt. While paying down credit card debt can be a challenge, however, it is not impossible. It takes proper planning and discipline but paying down a credit card balance on a card with high interest rates is possible.
According to LendingTree, the average annual percentage rate on a new credit card is over 20 percent, and rates only seem to be increasing over time, especially as the cost of living continues to rise. This trend presents a major problem for American consumers with high credit card balances. In fact, according to reports from the Federal Reserve Bank of New York, credit card balances reached a high of $841 billion in the first quarter of 2022.
One of the most effective ways of getting out of outstanding credit card debt is to get out of a credit card that has a high interest rate. This can be done several different ways, including transferring outstanding balances to another credit card with a zero-interest rate or paying off credit card balances with a personal loan with a lower interest rate. If using a balance transfer card, it is important the consumer pay off the balance before the promotional period ends, resulting in an interest rate spike.
Several different repayment methods have proven to be successful in paying down large credit card balances. One of these methods involves taking the card with the smallest balance and putting any extra money towards that balance while continuing to pay the minimum owed on any other credit cards. Once that card is paid in full, the consumer should pay off the card with the next lowest balance until all cards are paid off in full. Alternatively, the consumer can tackle his or her debt by taking the card with the largest balance or highest interest rate, focusing any extra payments on that card first before all debt is paid in full.
While making these payments, it is important that the consumer not continue to use the credit card. Otherwise, all his or her hard work will not go anywhere if new purchases continue to be added to the outstanding balance. If possible, the consumer should try to put away some money for an emergency savings so that the consumer is able to handle big and unexpected expenses when they come up in lieu of relying on credit cards to pay for them.
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.
Filing for bankruptcy is 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 regard to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.
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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 www.miamibankruptcy.com.
