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credit cards
credit card payments
using credit cards
credit card debt
minimum payment
credit card payment
catch 22
groceries
Credit Cards A Plenty
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Credit Cards A Plenty

Credit card debt has become one of the largest consumer problems in recent times. I know, because after 20 years of credit card use, the debt catch-22 has finally caught up.

The banks do not care (to an extent) how much you are in debt, as long as you can make a minimum payment every month. Credit card debt is not bad if you can pay off the balance each month. The problem though is when your income does not keep up with the every day products that you need, you start extending too much by using credit cards. You try to fill the gap, and figure that your next raise will make up for the increase in spending. The problem is other expenses come up (e.g. a new roof after a storm, insurance will only cover part of it; car needs new tires, brakes etc.) all add up. Before you know (well actually 20 years) you have to resort to buying groceries on your card.

This is what I refer to as a catch-22, now with the credit cards maxed out, you are paying the minimum payment for the credit card payments. Each card starts to add up, so when you make each credit card payment you have nothing left to pay for food, gas, kids clothes and shoes. With all the cash going to pay the credit cards and mortgage, you have to pull out the charge card to buy the food, gas and clothes for kids. So this crazy merry go round starts and you can't get off.

Some lenders will settle with you. I had one large lender let me set two accounts up to pay off after six years with a six percent rate as long as the accounts were closed. Some lenders are not as helpful, I had one that increased my rate to twenty nine percent because they considered I had a late payment when a new automatic payment did not take affect when it was scheduled to.

Other factors can also complicate things. When an option of refinancing the mortgage came up several years ago to get a lower interest rate, the credit union decided to add our unsecured debt (credit cards) into the new loan and we were stuck with a higher payment and had to add mortgage insurance because the equity in the house was gone. (due to the addition of the unsecured debt)

So the real trick is don't use your credit card unless you can pay off the balance! I used to be able to do it, but as life changes and the family grows, it is not always possible. The advice I have is, if you have credit use it sparingly if you can. In my case it is too late.


Street Talk

Nice and informative article! I heard that some people will never get out of credit card debt because of interest rates. Hope that does not apply to you.

Reply
  about 7 years ago

Yes Lewis, you don't seem to pay down anything because the interest takes half the minimum payment!

Reply
  about 7 years ago

Thanks for the tip, James ! I had big credit card debts many years ago. Especially when times are bad. Hope things turn up well for you.

Reply
  about 7 years ago

Thanks Eugene, I think they will if I can get going with WA. So far Kyle and Carson have been GREAT! I have a lot of faith in them, they really know what they are doing and I hope I can follow in there footsteps.

Reply
  about 7 years ago
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