Getting out from under Bad Credit Card Debt
A Credit Article Contributed by Mark Mcclelland
What Actually Constitutes Bad Credit Card Debt
If history is any clue, virtually ALL credit card debt is bad debt. Not meaning to be a stick-in-the-mud here, but the apparent addiction to using credit cards is worse than smoking. Look at the facts:
Between 1994 and 1995 the total credit card debt jumped $30 Billion, up to $195.2 Billion. At that point in time the average credit card balance was $1825. At a payoff rate of $36 /month, the card holder would pay the monthly payment for more than 22 years to pay off that debt.
By the next year, 1996, the average card balance had "bloomed" to over $3900, with total industry debt exceeding $400 billion. OK you say, that was then, and this is now.
OK. By 2002 total debt had grown to $660 Billion. And with an average household debt of $8400, at an average annual interest rate of approximately 18%, it'll take that family more than 25 years to pay off that debt, for a total payoff exceeding $24,000. And that's only if they stop using their credit cards altogether.
There's no other way to say it. Credit card debt is bad debt.
Is It Possible to Get out from under Bad Credit Card Debt
The credit card issuers make it absurdly easy to get a card, regardless of your specific financial circumstances; you can get a card if you're broke, if you've declared bankruptcy, if you have an abysmal credit history, or someone with no history at all. Regardless of your situation, you'll be able to find someone out there who'll issue you a card.
And using the card is almost hypnotic, all you have to do is sign your name and you can get stuff... any kind of stuff... anywhere .... whether you need it or not. It's so simple it's simply addictive. And over and above that, you can even pay off one credit card by transferring the balance to another card.
In the final analysis however, the sad fact is that you owe someone, maybe lots of someones, a heaping pile of money. There's imply no getting away from that fact... and they're going to get it, even if they have to raise your interest rate to do it.
The card issuers have tried to make it so that we can't live without their cards, and to a large extent thay've been successful in their efforts. But it is indeed possible to jump off the carrousel, but it'll be just like quitting smoking - it's probably going to be really painful, take a long time, and you'll forever after be on your guard to avoid slipping back in to your old habits.
What Options are Available for Resolving Bad Credit Card Debt Issues
The only REAL long term option for resolving your debt issues is to stop using your credit cards and work on modifying or eliminating your bad spending habits.
You can replace your unsecured credit cards (the ones that REALLY get us into trouble) with secured credit cards - cards that restrict your credit limit to the value of a security deposit you place in an appropriate security account, or a debit card - one that draws funds directly from your checking or savings account(s). But before you convert to a secured card or a debit card, you'll have to go through the pain of paying off your unsecured cards first.
You can be assured of one thing though, having more cash in your bank accounts because you aren't making outrageous payments to the credit card companies and you're starting to overcome your bad spending habits sure feels nice.
