The Right and Wrong Ways to Duck Credit Card Debt

When you’re overwhelmed with uncontrollable credit card debt, isn’t it tempting to just run away from it all? However, you know that this isn’t really possible and definitely not a good thing to do. Therefore no matter how frustrating it can be, you have no choice but to do the right thing. You must pay what you owe back no matter how hard it may be on your part. But be careful. Sometimes, in your desperation and hurry to pay, you might do some blunders that harm you harder than your outstanding balance.

Here are some big mistakes to pay your debt and the correct alternative to it:

Withdrawing from your credit card to pay off another card bill. This is also called cash advance and an expensive move to do. Service fee’s alone are 3% or more excluding the very high interest rates. According to Harrine Freeman, CEO of Freeman Enterprises, a cash advance from a credit card can cost 500% or higher.

A good alternative to this is a credit card balance transfer. Credit card providers usually offer 0% interest on their cards for a year. This is a good time to pay off all your credit card bills without accruing further interest rates.

Slice off some amount from your 401k plan. These savings secure your future. When you start messing with them, it will hurt your finances in more ways than one. One, you will be penalized with 10% interest due to your untimely withdrawal. Second, when you fail to pay on time, you will be taxed and penalised on the amount you borrowed. However, the most important disadvantage in doing this is you’re robbing yourself of a sufficient income come retirement.

Work to repay now while you are young and leave your retirement plan alone. When you’re old and can no longer work, those savings will secure you most. Whatever you can save on now, do so so that you pay your bills. Reduce your expenses in as creative ways as possible and control your credit card use.

Avoid opening new accounts too just so you could accommodate paying your other bills. Also, practice budgeting and living within your means. When you do these things, in no time you will come out of debt clean. Sure, it is a slow and painstaking process. But through this experience, hopefully you will learn to be a responsible consumer in the long run.