Credit Card Help

We’ve all dreamed about being debt free, haven’t we? Well now you can do it, and I’ll tell you how!

During this last holiday season, Americans charged more than $148 BILLION! And that extra debt was piled on top of the normal debt that we already owe! But don’t wait until someone tells you you’re in debt or until the bills start coming in to figure out just how big a hole you’re in. Find out now. Get online and visit your credit cards’ websites to see what kind of numbers you’re looking at.

You’ll know that your spending is really out of control if you have to borrow money to pay off your credit card bills. That’s what you need to come to terms with. Take a really good look at all of your debts. If your monthly debt is between 15 and 20 percent of your monthly income, you’ve got way too much debt and you need to start lowering your expenses. And if your debt is even higher than 20 percent, you’re probably going to want to seek professional credit card debt help.

Great benefits can come from a reward card. But keep in mind that credit card issuers are simply teaming up with airlines and other companies to entice you to charge more on your credit card. If you’re constantly carrying a balance from one month to the next, what you end up paying in interest from that balance is just going to eliminate any benefit you’re getting from the reward card. So make sure that the reward is worth it. Usually airline miles as a reward are not a good deal. For example, if you’re required to spend $40,000 in order to earn a round-trip ticket, yet you could have paid only a couple hundred dollars for the same ticket, is it really worth it? That’s something you need to ask yourself. And you shouldn't even consider zero percent credit cards.

What it comes down to is that reward cards can be good for those who pay off their balances in full almost every month and for those who use their cards for business purposes.

Credit card debt is one of the most “expensive” debts you can get yourself into. On average, the interest rate is higher than 14 percent, and many people are even paying rates as high as 30 percent. Because credit card debt is so incredibly expensive, you'll definitely want to pay that off first. But keep in mind that if you only pay the minimum monthly payment, it might take you up to 30 years to pay off that debt!

For example, if you owe $9,000 with an interest rate of 15% and you only make the minimum monthly payment, it’s going to cost you almost $7,000 in interest by the time you pay it off! That’s almost twice as much as what you started with. And it’s also going to take you about 19 years to pay it off. Wouldn't it be better if you could spend that money on a college education fund or a much-needed vacation?

You might be making a smart move by taking out a home equity line of credit (HELOC) to pay off your credit card debt. Most likely a HELOC will have a lower interest rate that moves down a bit every time the government cuts rates. The interest you pay is also tax-deductible. But you’ll also want to consider the negative aspects of a HELOC.

First, and worst, of all, as soon as you stop making your credit card payments, they’re going to come and take your home away from you. At that point, when you have all your debt rolled into a HELOC, you’re risking your home if you can’t pay off your balance. In addition, in order to even get a HELOC, your home will need to be appraised. Because of the dramatic drop in housing prices recently, most like the value of your home will be set lower than you expected.

Just remember that using other funds to pay off your credit card debt isn’t going to solve the main problem: your spending. You’ll be much better off if you can take control of your budget and charge to your credit cards sparingly.

Credit cards are essentially small (hopefully) and simple 30-day loans that you need to pay back in full at the end of the 30 days. Put simply, credit cards are a convenience. They’re not a way of life. Credit cards are not a license to spend until your heart’s content! In the future you shouldn't need credit card help if you just remember the things that were talked about here.

And as a final note, you should never put your mortgage payment on your credit card, even though many people have started doing it. You’ll just be compounding the problems that you’ll encounter in the future.