Credit Card Debt

What to Do After Paying Off Your Credit Card Debt

Credit card debt is a source of stress for many consumers. Once a large balance is accrued, the high interest rates can make credit cards nearly impossible to pay off.  Whether you have been able to pay off your credit card debt or have had the debt discharged in bankruptcy, it is important to modify your financial behavior moving forward.   

Monitor Your Credit Score 

Consumers should monitor their credit reports on an annual basis to ensure that there are no inaccuracies. Once a credit card is paid off in full, that should reflect on the person’s credit report. Additionally, paying down a large sum of debt will have a positive effect on the consumer’s credit score. As the person’s credit score goes up, his or her chances of being approved for financing in the future also improves. After paying off debt, the consumer should check his or her credit report to ensure that this payment is reflected on his or her score. To make sure that the consumer’s credit score improves, periodic monitoring of his or her credit report should also occur.  

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

5 Mistakes keeping you in Credit Card Debt

Approximately 122 million Americans carry credit card debt.  In fact, the average debt per household is $8,448.  With interest rates averaging 14%, that means Americans are paying more than $1,000 in interest alone each year.  Many consumers remain trapped in this cycle.  Here’s why:

  1. Failure to create a realistic budget. When establishing a budget for yourself, it is easy to look forward and see how much you will spend. However, the most effective budgets are created by looking backwards, and understanding where your money (every last penny) went.
  2. Not making the tough decisions. Oftentimes, the right decisions are easy to calculate but hard to execute. For example, knowing your car payment is too high but not taking the steps to trade it in and purchase a less costly, slightly older model.
  3. Taking advantage of automation. It’s easy to automate your student loan and retirement payments, but what about your credit card payments? If you plan to become debt-free you can make sure the only money remaining in your checking account at the end of each month is your budgeted spending money.  Data has shown that automation is the best way to achieve your financial goals.
  4. Convincing yourself the reward points, miles, cash back, etc. are worth it. Earning cash back and “free” flyer miles are a great way to put some extra money in your pocket.  But if you are deep in credit card debt, those flights and reward points are costing you more than the perks.
  5. Trying to borrow your way out of debt. Debt consolidation and balance transfers can help reduce the cost of your debt, but if you have not dealt with your spending problems these tools can be dangerous.

If you have any 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, P.A. 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 website at www.miamibankruptcy.com.

Related Resources: https://www.forbes.com/sites/nickclements/2017/07/12/5-mistakes-keeping-you-in-credit-card-debt/#7aa149cf2545

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What You Should Know before Closing out A Credit Card

When closing out a credit card, the effects it can have on your credit score lie in the details.  Here are some important facts you need to know before closing out your card.

  1. Age Matters. The age of your credit card that is. The average age of your open accounts makes up 15 percent of your overall credit score. So if the card you are closing out has been open for a long time, it really is better to keep it open and pay it in full, otherwise your score will be negatively effected.
  2. Available Credit. Your credit utilization ratio is important. A low credit utilization ratio would be if you have $300 or less on a credit card that allows you to spend $1,000.  A high credit utilization ratio is if you have $993 in charges on a card that gives you a credit limit of $1,000.  Lenders do not like you to do this and your score will be penalized as a result.
  3. Automatic payments. If you have been using your credit card to make payments on your car insurance or electric bill each month automatically, make sure and update this information timely before closing out the card.  This way you can avoid getting hit with late fees and other penalties.
  4. Rewards. If you have accumulated reward points on your credit card, redeem them first before closing out the card.  Otherwise you will likely lose them.
  5. Verify. It can take up to a month or two before the account is closed, so keep that in mind. Mistakes on credit reports are also fairly common. In fact, a recent study revealed that one in five consumers have at least one error on their credit report. It is always a good idea to double-check your account has been completely closed out.

If you have any 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, P.A. 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 website at www.miamibankruptcy.com.

Related Resources: http://www.cnbc.com/2017/07/12/10-things-to-know-before-closing-a-credit-card.html