Credit cards can be extremely useful for certain things, but they are not without their drawbacks. When you use a credit card to build your credit by making small purchases and always paying your bills, there’s no danger of going into debt or ruining your credit.
Credit cards can however bring you much trouble and financial burden if you use them for big purchases, and only make the minimum payment on your card. You then end with up lots of credit card debt due to the interest rate on the money you borrow from the credit card company.
The Problem: Cycle Of Debt
Credit card debt is one of the worst kinds of debt you can have because it basically never goes away. You can be paying your bill seemingly on time every month, or even adding in a little extra here and there, and you’ll still be thousands of dollars in credit card debt every time you check your balance.
Why? Because the interest rates keep you from ever really getting a hold on your debt.
Even if you transfer your balance over to another credit card to take advantage of the enticing low interest rates for the first 6 months, after half a year, you're back to the same interest rates as before and forced to either keep switching credit cards until you run out of options, or keep taking a nose dive in ever deepening debt hole.
The Solution: Consolidate
As you can imagine, credit cards are not all they are cracked up to be. The debt you can find yourself in can out a huge burden on your life and can almost always seem inescapable.
Thankfully you can take out what’s known as a debt consolidation loan in order to pay off your debt. These kinds of loans are labeled as micro loans or short term loans and are used solely for the purpose of paying off your debt.
At the interest rates a credit card company charges you, it would normally take you over 50 years to get to the point where you had zero debt. With a short term loan, you will be charged higher interest rates, but you will be almost guaranteed to pay off your loan within the agreed upon terms.
So while you will have a much higher annual interest rate with short term loans for debt consolidation, you will be able to pay it off much quicker than you would with credit card payments. The key factor in determining if a short term loan will work for you, is to look at the length of time it will keep you in debt, not the interest rate.
Run, Don't Walk
When it comes to credit cards and credit card debt, the only thing you should be thinking is how to get out of them as fast as possible.
Being in debt is terrible for your happiness as well as your credit, use this article to make the right decision and find the right short term loans for yourself to pay off that insidious credit card debt for good. Don't spend the next 80 years of your life with thousands of dollars of debt on your back ignoring the interest rates that are slowly burying you alive in credit card debt.
Make an informed choice today. Get yourself out of debt and read about our personal loans. Do you think it's something Ferratum Canada could help you with?
Feel a bit of relief regarding your credit card debt? Now it's time to become a zen master of finance: Read my top 4 tips on never stressing about money again.