Credit card debt is rampant through Cape Girardeau as well as the rest of the United States. While some people are able to keep up with their payments or only use their cards for emergencies, many others use credit cards to purchase groceries, pay monthly utilities bills and other daily expenses. While these are some of the most common ways that people find themselves with overwhelming credit card debt, there are several other ways that credit card debt can catch you by surprise and wreck your finances.
The best way to avoid credit card debt is to stay away from credit cards altogether. Unfortunately, this is not an option for a lot of people or for those trying to establish a high enough credit score to qualify for a car or home loan. Knowing about the less obvious ways credit card debt can sneak up on you can help you avoid some of the hidden traps.
Not reading the fine print
Financial institutions began offering rewards programs with their credit cards in order to entice more people to sign up for them. The idea of a trip to the beach is often enough to get people to book that vacation now. Of course, if you can easily pay that credit card bill when it comes due, then you may not run into any problems. Unfortunately, many people do not read the fine print associated with these rewards programs and end up paying significantly more in interest and fees if they fail to meet the requirements for booking that seemingly discounted trip.
The terms can change
Even after the Credit Card Accountability Responsibility and Disclosure Act of 2009, credit card companies still have a substantial amount of power. For instance, the credit card company can make changes to the terms of your contract if you are late with a payment. In some cases, if you are over 60 days late on a payment, the card company can apply the penalty rate to your entire outstanding balance, not just the amount that would have been included in an on-time payment.
You took out a payday loan to make a payment
If you suddenly find yourself unable to make a payment, you might decide to take out a quick payday loan to get caught up. However, this is essentially creating a new debt to pay off an old debt. In addition, payday loans are usually short-term loans with high interest rates. Taking out a payday loan often becomes a vicious cycle that leads to a worse financial position than if you had made that credit card payment a little late.
If you have found yourself struggling with debt and you can no longer keep up with even the minimum payments on your credit card, car or house, there might be options available to help you get your finances back on track. You may qualify to file for bankruptcy and get your debt under control.