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Wednesday, August 14, 2013

The get out of credit card debt guide

By Paul Paquin

748 billion dollars of credit card debt circulates this country, in the hands of US consumers as of 2013.  This is a five-year high. We all need to take action and fast.
Total US Credit Card Debt

Are you drowning in credit card debt?  Relief can come in the form of credit card debt relief programs, but sometimes consumers simply need basic guidance and tips to pay off debt.   This day and age many consumers have high interest, and they are paying minimum payments just to get by, but at that rate they will never become debt free.

Today we will give you a guide so that you can learn how to pay off unsecured debt.  This includes credit cards, collection accounts, private and federal student loans and medical bills.

Stay current to pay off credit card debt

  1.  Make a budget using excel.  Put all of your expenses in one column and your income in another.
  2. It is time to free up cash.  Eliminate as much of the expenses as you can, putting more money in the income column.   Example:  (Stop going to the movies 3 times a week, cut down going to dinner 4 times per week, eliminate going to the bar every Friday and Saturday, use coupons at the grocery store to lower your grocery bill)
  3. With the extra money that you free up, use it all to pay towards your highest interest credit card.
  4. Your job will be to pay off your highest interest credit card first, since that is what’s costing you the most money.  To do this you will need to pay as much as you can over the minimum payment as possible.
  5. After you pay off your highest interest credit card, then move onto your next highest interest card, and continue on this path until you are debt free.
  6. On your other accounts continue paying the minimum payment only, until those accounts are up on the ladder.
$50,000 in Credit Card Debt with a 25% Interest Rate
  1.  Minimum Payments - You will have to make 115 payment(s) for a total of $132,250.00 ($82,250.00 of which is interest) to pay off this debt when paying a total of $1,150 per month (minimum payments).
  2. Paying More Than Minimum Payments - If you pay $2,000 per month you will have to make 36 payment(s) for a total of $72,000.00 ($22,000.00 of which is interest) to pay of $50,000 in credit card debt.
Option B is much better right?   This is why you must pay as much as you can over the minimum payment on the highest interest account first. 

Consumer credit counseling to pay off credit card debt

  1.  Only join with a non-profit consumer credit counseling company.
  2. They will contact your creditors and negotiate a lower interest rate.
  3. Your monthly payment will be around what it is when paying minimum payments on your own, but with this type of program a consumer can often be debt free in around 4-5.
  4. Consumers are set up with one comfortable monthly payment, where the consumer credit counseling company disperses the funds to the creditors each month. 
  5. On this type of program creditors are paid in full, but consumers end up paying less interest.
  6. It is reported to the credit reporting agencies that a person joined a consumer credit counseling program and this mark will show up on a person’s credit report.
Debt Relief Options

Debt settlement to pay off credit card debt

  1.  A debt settlement program is designed to help a person that cannot afford to pay minimum payments or a consumer credit counseling program.
  2. A person can end up paying back less than the total amount owed on each debt.
  3. This type of program can have a negative impact on a person’s credit because accounts must go to a collection agency prior to them being settled.
  4. A person’s credit score can be rebuilt upon graduation from a debt settlement program.
  5. Consumers should only join with a company that has a high rating and zero unresolved complaints with the Better Business Bureau.
  6. Consumers can be debt free in around 3 years and sometimes faster.
  7. Like with consumer credit counseling consumers are set up with only one monthly payment to go towards all debts.
  8. This is the most popular credit card debt relief program to help a person avoid having to file for bankruptcy.
This information was provided by Golden Financial Services, a BBB “A+” Rated debt settlement services company that has been providing debt relief since 2004.

About the author: Paul Paquin is the CEO at Golden Financial Services.  Paul has more than 10 years of experience in the Debt Relief Industry.  Paul is a Christian and family man.

* All images author owned and licensed