Pay Attention to Interest Rates

Posted on Aug 18, 2012 By Bond & Botes, PC

When it comes to credit card debt, it’s all too common for individuals to get stuck in a never-ending, increasing debt spiral. An individual may start their credit history with a few fun purchases, but soon they find themselves unable to pay their balance off, which can eventually lead to needing to pay credit card bills with other credit card accounts.

If that cycle is allowed to go for long enough, an individual may find themselves having to file for bankruptcy. If it is caught early enough, however, it is often possible to fix the issue. This is generally done by stopping the use of all credit cards. Movies and TV shows are well-known for showing characters cutting up their credit cards at this point.

While nothing that drastic needs to take place, the truth is that continuing to use a credit card that you can barely afford is detrimental to your recovery. If you currently rely on credit to pay for necessary expenses, you will likely have to analyze your budget and find ways to cut your budget down, or even potentially obtain a 2nd job.

In addition to this, you will need to take a look at all of your accounts to find out which ones are costing you the most, month-by-month. By that, I mean interest rate. Many accounts will lure people in with talk of low interest rates, but in the fine print, the account details will outline that if an individual is ever late or misses a payment, the account automatically defaults to a drastically higher interest rate, like 29.99%.

Interest is wasted money, so it is crucial to check on a monthly basis what your interest rates are, so that you can focus on paying off the ones with the highest interest rates first. You will then be able to roll that payment amount into the next account as well, picking up speed as you go.

The road to getting out of debt is long, but with a little planning and guidance, you may find yourself free sooner than you think.