These days, American consumers are struggling just to keep pace with rising prices for basic staples. No matter what the news tells you, regular folks are beset by falling wages, shrinking 401(k)s and an apparent lack of economic opportunity.
For many consumers, debt – from credit card bills and hospital financing to personal credit lines and business loans – offers an apparent escape from day-to-day financial pressures.
Not all forms of credit are actively bad, and many folks are able to use debt as a responsible means of augmenting their purchasing power. When you’re dealing with a million competing priorities, however, it can be tough to keep your finances straight. If your expenses are rising faster than your income, you can only keep up this dance for so long.
Recognizing that you need to do something about your debts is an important first step on your road back to solvency. Whether your credit problems have become a pressing emergency or you’re merely looking to shore up your finances before its too late, you have several plausible options at your disposal.
Thinking About Squeaking By on the Minimum Payment Plan? Think Again.
When it comes to paying off credit card debt, many consumers take the path of least resistance: the so-called “minimum payment plan.” By law, credit card issuers are required to set a minimum monthly payment amount for each cardholder. These payments are calculated on the basis of the cardholder’s total balance, interest rate and certain other factors.
Minimum monthly payments can be shockingly low. If you’re carrying a balance of $10,000 on a single credit card, your monthly payment could be just $200 per month. Depending on your income, that could be perfectly manageable for you and your family.
Of course, credit card companies want something in return for your trouble, and they get it in the form of sky-high interest rates.