Free yourself From Credit Card Debt

by : Melissa Kellett

When you owe too much money on your credit cards and you can't meet the minimum payments. Penalty fees and interest rates start being applied and debt keeps growing at a continually increasing rate. You know you must put an end to this situation but you don't know how to do it? A debt consolidation loan can be the answer to your problems.

If you can control your spending, a debt consolidation loan will give you some space for reorganizing your finances and start reducing your debt on a continued pace. A debt consolidation loan alone won't solve your problems though. You need to have some discipline, cut your spending dramatically and stick to a budget rigorously in order for a debt consolidation/reduction plan to work.

Credit Card Debt Spiraling

The main problem with credit card debt is that due to the high interest rates that credit card financing implies, it can easily escalate and go out of control. The possibility to make only minimum payments that increase in a slower rate than the debt itself is extremely tempting but leads hopelessly to debt accumulation. Eventually, minimum payments become unaffordable and a late payment or a missed payment triggers credit cards' penalty fees and rates that boost this process even more, making debt reach new heights.

To put a stop to this, one needs to refrain from using the credit cards and start making more than the minimum payments because sometimes even the minimum payments won't cover for the amounts added due to interest, fees and other costs. However, this is not always possible and so; another source of finance must be used to cope with this problem. That's when Debt Consolidation Loans become an invaluable aid.

Consolidating Credit Card Debt

A Debt Consolidation Loans will let you cancel your credit card balances in full so they stop generating high amounts of interests. You'll only have to worry about a single monthly installment: The debt consolidation loan payment. The interest rate charged for the money will be considerably lower and the repayment program will be flexible enough so you can easily afford the monthly payments.

However, you need to be extremely careful, because, unless you stop using your credit cards, the debt consolidation loan won't be anything but an invitation to continue increasing your debt to new and higher amounts and the only solution this next time will be to file for bankruptcy. In order to avoid such situation you need to change your spending behavior.

The best thing you can do is to destroy all your credit cards but one or two. Do the same with all your store cards (store cards carry a lot higher interest rates than regular credit cards so you need to be extra careful with them). Even after getting rid of all your cards but one or two, you need to refrain from using the ones left unless the expenses are really necessary. You can use this procedure: Before buying anything think whether you have the cash to pay for it or not, if you don't then you shouldn't buy it unless it is an essential and urgent need like food or medicine.