Credit Card Debt Management

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Written By Financial master






In our current society it has become increasingly easy to obtain different types of credit through a selection of various vendors. So it’s not hard to see why it has become common for individuals to find themselves in debt as soon as they are old enough to take out credit. With the constant cost pressures coming as a direct result of ever rising prices of general day to day living and low wages, it has become second nature for many to live off borrowed money.

If you can manage your credit in a responsible manner and only use it when it is absolutely necessary, credit cards and other forms of unsecured borrowing can offer a life line. Additionally, if you do decide to use one of these forms of borrowing, it is imperative that you budget for the following month to pay it back in full in order to avoid mounting interest rates.

By Alan Cleaver under CC BY 2.0
By Alan Cleaver under CC BY 2.0

With Annual Percentage Rates (APR’s) being higher on unsecured lending than on secured, it isn’t hard to understand why people’s finances can become unstuck. Imagine that you experience a burst water pipe one month, which is an extra cost on top of your general expenses, you may decide to utilise your credit to cover it. Then, what happens if the following month your car breaks down and needs to be fixed in order to allow you to get to and from work. All it would take is a few months of small accidents and your reliability on credit can grow, in turn building your debt levels up to what can often be an unmanageable level.

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When it comes to paying it back, the monthly minimum re-payments could amount to far more than your disposable income can cope with. Out of fear that you will lose control you might either start to compromise on your quality of living or alternatively, bury your head in the sand and pretend that everything is okay. With what seems to be no light at the end of the tunnel – where can you turn to for help?

An initial option, which isn’t always available to everyone, is by asking friends or family for some financial support. While it may well be embarrassing talking to them, you will often discover that they will offer a sympathetic ear at least and, if you are lucky, they might even be able to help you out. The main advantage of this is that you won’t have large APR’s to deal with and in turn it can prevent your debts from growing whilst you are trying to pay them off. But, unfortunately, as many people are struggling this isn’t always a suitable option; friends and family wanting to help but just not having the spare cash to do so.

Another option to start taking control of your debts is via an informal agreement, which is known as a Debt Management Plan (DMP). This is an agreement entered into by both yourself and your unsecured lenders to whom you owe money and it involves an agreement being drawn up, which involves you paying off all of what you owe by making a more manageable payment over a longer period of time. If you use a good Debt Management Company, they will look at your income and work out a plan, which is both affordable and doesn’t compromise on your necessities (such as rent and food). In some instances the debt management company can also look to get the interest rates reduced or even frozen. This can often leave the debtor with the cash that they need to manage their day to day lives without the constant stress of trying to spread their money too far.

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There are, of course, many more options and debt solutions available if you find yourself struggling with credit cards debts or any other form of unsecured credit, with many guides and sites offering helpful starting points. Although finding the right solution for your circumstances can often seem like a challenge, getting the right support and advice can help to reinforce the fact that you are not alone.

By Dan Frodsham