Are You Tired of Making Credit Card Payments
Each Month That Get You Nowhere?
If you have credit card debt that is low, perhaps around $5,000, your minimum payment is manageable and you can likely afford the payments without difficulty. You can likely even pay down the balance by paying over the minimum payment.
However, if you have a large amount of credit card debt, perhaps $30,000 or more, your monthly minimum payment can quickly become unmanageable.
Even if you can afford the minimum payment, if you are having trouble paying more than the minimum payment you will have difficulty paying off your balance in the near future.
The longer you are in debt the more expensive your debt will become.
If you are over your limit or have a high interest rate, your debt becomes even more costly.
Falling Victim to the Debt Trap
When you make your minimum payments on your credit cards, you are mostly paying the interest charges on your debt. Your payments each month will barely make a dent in your overall debt balance. Many debtors feel that as long as they make the minimum payments on their credit card debt they will be fine. This is how the debt trap starts. As the minimum payment is almost entirely paid towards interest, then your balance never goes down.
If you keep spending, which is easy to do, your credit card debt balance can slowly creep up over time.
Spending often increases when you buy on impulse with credit, because it doesn’t seem like real money. As the balance on your credit card debt rises, so does your minimum payment requirements, which makes it easy to get into a debt situation that is uncontrollable.
In the Future
After several years of this cycle, you can find yourself in serious credit card debt. Even if you stop using your credit cards, the interest charges on a large credit card bill can be unmanageable. Many debtors have been trapped paying only their interest charges for many years. They constantly make large payments to their credit card company, but their balance never gets smaller. There are many consequences to having a high credit card balance:
- Monthly payments only go to interest payments;
- Your debt becomes overwhelming;
- All your income goes to debt payments;
How to Stop the Cycle of Making Credit Card
Payments Each Month That Get You Nowhere
Filing bankruptcy or a consumer proposal is often the best way to end a debt cycle. You can meet with our licensed insolvency trustees to speak about your options for getting out of debt. If you are going bankrupt for the first time, you can be out of debt in as little as 9 months.
When you make a proposal to your creditors or go bankrupt your monthly payments will be less than your minimum debt payments. You will be able to save for the future and you can rebuild your credit rating after your bankruptcy discharge.