Credit Card Debt – When Should You Seek Advice?
When it comes to spending your money, there are several ways you could do it.
Nowadays, one of the most popular ways to spend is by using a credit card – it’s quick, it’s convenient and it lets you spend money you may not otherwise have until payday.
While credit cards offer a quick and easy way to make purchases, they don’t come without their risks. Spending too much money on your credit card can be dangerous – particularly if your situation was to change and you weren’t able to afford your repayments… in this situation, you could soon find yourself struggling with debt.
At what stage should you look for advice, though? Well, that’s a good question, and this guide takes a quick look at it.
Understanding credit card debt
Before taking on credit card debt, it’s important you bear a few key points in mind. First of all, the money you spend on your credit card has to be repaid. If you don’t repay it by the ‘deadline’ set by your credit card provider, your debt will start accruing interest at the agreed rate.A problem can arise when you are unable to afford your credit card debt repayments each month. Whatever the issue, if you fall behind on your monthly payments, you could soon find yourself struggling with unmanageable debt as the interest grows.
At what stage should I seek advice?
Generally speaking, as soon as you notice something isn’t right (e.g. you’re spending more than you earn, or you’re finding it hard to meet all your expenses), you should seek advice.Of course, if you can spot a potential issue before it really starts causing you any troubles, so much the better – the sooner you seek advice about your debts, the sooner you can get some pointers on getting / keeping them under control.
Avoiding problems in the first place
There are ways you could improve your chances of avoiding any problems in the first place. We’re going to discuss two of these briefly now.Firstly, you could take out a debt consolidation loan to repay all your unsecured debts (including credit card debts) in one go – replacing them with just one, easier-to-manage debt.
This could help you simplify your finances by leaving you with just one payment to make each month instead of several. It could also allow you to pay less each month – if you arrange to repay your debt consolidation loan over a longer timeframe than your original debts.
Please be aware, though, that debt consolidation does have its downsides. For example, arranging to repay your loan over a longer timeframe will mean you’re in debt for longer – which means you’ll be paying interest for longer too, so it can end up costing you more in the long run.
Another way you could avoid financial problems is by planning your monthly budget out in advance – so you’ll be able to see how far your money will go each month, and whether or not you’re likely to come up against any problems (like running out of money before the end of the month).
Of course, problems can’t always be avoided. If you’re made redundant, for example, or you have to take a pay cut, you’re simply not going to have as much money at your disposal each month. And although you can’t predict whether this will happen, you can take measures to protect yourself in case it does. For example, you could reduce the amount you spend on your credit card, so there’s less chance of running into problems when it comes to repaying your debt. Or you could work on repaying any existing credit card debt quickly, so there’s less to worry about in the future.
If you’d like to talk to an expert about it, Debt Advisory Centre could help you explore your options.
Guest Post by Debt Advisory Centre
Great Reasons to Consider Prepaid Credit Cards
In today’s consumer-driven culture, you’ll often be required to pay for things with a credit card, or at least show proof that you have access to one. This is especially common in the travel industry, where you may not even be able to check into a hotel or rent a car without showing a credit card first. However, if you have a lack of credit history, or have had credit problems in the past, it can be very difficult to successfully apply for a credit card. This is where prepaid credit cards can be very helpful.
How Can Prepaid Credit Cards Benefit Me?
Prepaid credit cards offer a way to pay for things that is convenient as well as secure. Many of the major credit card companies such as Visa and MasterCard offer their own versions of prepaid credit cards, so you’ll find that you can use your prepaid credit card anywhere in the world, wherever those card brands are accepted. And, if you lose your prepaid credit card, you can rest assured that your funds will be safe, because the card cannot be used without a unique pin number that you assign to it once you deposit the initial funds.
Prepaid Credit Cards Offer a Hassle-Free Application Process
Whereas traditional credit card applications are usually several pages in length and require a background or credit history check, this is not the case with prepaid credit cards. You simply open an account and deposit a specific amount to the card. Because it is so easy to get started with using a prepaid credit card, many people use them when they are travelling or to give as gifts.
Prepaid Credit Cards Teach Responsible Spending Habits
Finally, prepaid credit cards are beneficial because they teach users to handle their money properly. Since cardholders only have access to a predetermined amount of funds, there is no chance of spending beyond one’s means, as is possible with a traditional credit card.
Credit Building Tip:
Some people are able to overcome spending and budgeting problems and get debt free. At that point, you may want to consider a secured credit card to help you rebuild credit. Becoming debt free can be hard work but is very financially freeing so do be careful!
Direct Deposit Tip:
*Some prepaid credit cards can be great alternatives to checking accounts and will offer bonuses to you when you choose to set up direct deposit *
Helpful Resources:
Ray Stevens Obama Budget Video
How’s your household budget balancing? Check out the Ray Stevens Video about what could happen if a family implemented what he calls “the Obama Budget Plan”:
