Credit Card Debt, Debt Relief

Best Ways to Pay Off a Large Credit Card Bill

Many Americans ended the year 2020 with large credit card balances, and now with the new year in full swing, they may be looking for ways to chip away at that debt. Carrying a high balance on credit cards not only makes life harder, but it can present a major threat to that person’s financial stability. Several different options are available to consumers seeking to reduce or pay off their large credit card balances. What works for one consumer may not work for another. Ultimately, it depends on the person’s credit history and current financial situation as to what will work for him or her.  

Personal Loans 

One popular method to pay down a credit card has been by taking out a personal loan to pay off the balance. This method is also known as debt consolidation, and it can be a successful way for consumers to pay down several large balances at once. By taking out a personal loan, he or she can use this money to pay off all these outstanding balances, leaving just the loan balance to pay a monthly basis. It effectively transfers credit card debt to a one, singular debt with a lower interest rate. Not only does this make repaying the amount easier, but it can also often save a lot of money in interest that would otherwise build up over time on multiple credit card balances.  

One nice benefit to paying down credit card debt through a personal loan is the borrower will be provided a repayment schedule. This means an end is in sight, and the borrower will know exactly when he or she will be debt-free, so long as he or she keeps up making the monthly payments. In comparisonsimply making the basic minimum monthly payments only extends how long the person will paying on the debt. It could take years or even decades to eventually pay down the amount owed.  

However, one word of caution should be made with respect to personal loans. While they do tend to have lower interest rates overall, personal loans are unsecured forms of debt, which means that they do have higher interest rates than traditional loans. If the consumer has a less than perfect credit history, the interest rate may be even higher. Additionally, since the personal loans tend to be for larger amounts, their monthly payments are more than the person’s minimum monthly credit card payment. Proper budgeting can help make this easier for the consumer, however.  

Balance Transfer Cards 

If the consumer is not able to secure a personal loan to pay off debt, a balance transfer credit card can also be another method to accomplish the same goal.  Many credit card companies offer promotional rates for balance transfer cards, giving the consumer an introductory period with zero percent APR for a set period of time. Usually, this period is anywhere from twelve months to 18 months. The purpose of having this promotional period of time is to give the consumer an opportunity to catch up on payments and pay down his or her debts quicker. However, it is key that the consumer pay off or significantly pay down the debt during this set timeline. Once the promotional period expires, an interest rate will be imposed, and the consumer may even end up finding himself or herself paying a higher interest rate than before. If no progress has been made on the balance of the card, the consumer may end up in a no-win situation.  

At the end of the day, what works for one consumer may not necessarily be a good choice for another. It is best to do the homework and explore what options are available for debt repayment. 

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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.   

COVID-19, Credit Card Debt

Credit Card Debt Falls 9 Percent Despite Decline in Economic Conditions

The coronavirus (COVID-19) pandemic has hit the country’s economy hard, but this fact does not seem to be reflected in the nation’s credit card debt According to statistics from credit reporting agency, Experian, credit card balances have declined at a record rate in 2020.  

Economic crises tend to lead to a change in consumer behavior. World War II pushed consumers to change their spending habits in ways they had not done before. The COVID-19 pandemic with forced lockdowns and widespread unemployment has likewise put things into perspective for American consumers, pushing them to change their spending habits, as well, including how they use their credit cards.  

Coronavirus, COVID-19, Credit Card Debt

More Americans Paying Rent on Credit Cards with No Second Stimulus Relief Bill in Sight

The coronavirus (COVID-19) pandemic has hit the country hard.  Many people have been left with no choice but to use their credit cards to pay for basic living expenses, including their rent. Financial analysts fear that this trend could be a warning sign that, without a second stimulus relief package from Congress, the nation’s economy is heading towards another crisis.  

According to statistics from the Federal Reserve Bank of Philadelphia, an increase of approximately 70 percent has been reported on the number of consumers using their credit cards to pay their rent. What this indicates is that the person using their credit to pay for the most basic of living expenses is significantly struggling, does not have any savings to pay for unexpected expenses, and is at risk of losing his or her home.  

Credit Card Debt

The 5 Best Ways to Pay Down Credit Card Debt during COVID-19

The coronavirus pandemic has compounded the stress of credit card debt for many Americans today.  Consumers have relied more than ever before on their credit cards to cover bills and necessary purchases due to the financial impact related to job losses and shutdowns.  The following methods can prove to be helpful for consumers looking to pay down their credit card debt during the COVID-19 crisis.  

Debt Snowball Method 

One method of paying down credit card debt which many consumers have had success with is known as the debt snowball method. This method works by focusing all payments on the credit card with the lowest balance first, while making minimum payments on all others. Once that card is paid in full, the consumer then focuses on the one with the next lowest balance, and so on, until all credit cards are paid off in full. By taking the smallest balance first, the consumer is likely to see progress being made paying down his or her debt. Seeing the actual progress can be motivation to keep paying down all remaining credit cards. This method is not a quick fix, however, although it does work successfully over time.  

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.  

Coronavirus, COVID-19, Credit Card Debt

How the Pandemic is Changing Americans’ Credit Card Habits

The coronavirus (COVID-19) pandemic has changed the way of life for consumers in both good and bad ways. One change has to do with the way Americans utilize their credit cards post-pandemic. 

A recent study conducted by Money and Morning Consult surveyed how American consumers have been using their credit cards during this crisis. What the study found was Americans are continuing to use their cards. However, the way by which they are using their cards has changed.  

Credit Card Debt, Debt Relief

Average American Consumer Carries over $90,000 in Debt

Most American consumers carry some form of debt. In fact, debt has become a way of life for many Americans. Whenever a big purchase needs to be made, consumers will often apply for financing to pay for this purchase. This can include items like a home, car, furniture, or even for basic purchases.  

According to data from the credit agency, Experian, as of 2019, the average American consumer has $90,460 in debt from various sources, including mortgages, student loan debt, personal loans and credit cards. Escaping this debt load can be tricky, and Experian’s data shows that certain generations struggle more than others when handling consumer debt. 

Credit Card Debt

How to Negotiate Your Credit Card Debt

When someone owes a large amount of money on credit cards, the possibility of ever paying down that balance can seem impossible. Simply making the minimum monthly payments can be a struggle, as well, especially during the current pandemic. However, credit card companies would rather work with the consumer directly in lieu of the account going into default, forcing them to pursue a collection on the amount owed. It is possible to negotiate directly with the credit card company on the amount owed in certain circumstances.  

During the coronavirus (COVID-19) crisis, certain credit card companies are working with consumers who are behind on payment. This assistance is temporary in nature but can include pausing payments, reducing interest rates, waving late fees, and putting a pause on interest charges.  

Bankruptcy Law

The Fear of Bankruptcy is What Keeps Many Consumers from Filing

The fear of the unknown is a powerful force. Unfortunately, the fear of filing for bankruptcy and the unknown keeps many from proceeding with a bankruptcy case, even when it is the best option.

It is for this reason that only a small portion of American consumers file for bankruptcy annually, even though many of them could benefit from either a Chapter 7 or Chapter 13 bankruptcy filing. While many different reasons exist for this failure to file, a misunderstanding of the process and fear of taking that first step keeps them from moving forward.    

Credit Card Debt

What Happens to Credit Card Debt When a Person Dies?

After an individual dies, one of the big questions that comes up from those handling the estate of the deceased is what happens to that person’s debt? These debts can include medical bills, taxes, and credit card debt. One of the main concerns brought up by clients is whether they will be personally responsible for the credit card debt of their deceased relative. The good news is only the estate will be responsible for any outstanding debt and not the family of the deceased.

Whether the person has a will or no will, his or her estate will need to be processed through probate court. If the deceased had a will, he or she will have named a personal representative who will handle the estate, and if the person has no will, the court will appoint someone to administer the estate.