How to Understand Your Credit Card Debt Situation

Although the average American household maintains $30,000 in credit card debt, many people have absolutely no idea just how bleak their situation really is. Not only is it responsible to pull your own credit report at least once a year, but keeping a constantly-updated ledger with current debts and amounts can prove to be an invaluable practice in understanding exactly how hot the water is in which you’re wading. When’s the last time you saw a copy of your consumer credit report?

Many Americans, particularly married individuals are often thrown for a tremendous loop when they see exactly how high their debt amounts are in black and white. If you’re unsure how to get a credit score of your own, any financial advisor or reputable financial agency can help you, but it does require that you provide some personal information, including a social security number, so it’s important to do your homework before requesting this service. Some agencies also charge a fee for this service, which can often be a give-away that some of their practices may not be above board.

Although simply learning what your situation is may be a struggle in itself, the real challenge begins with figuring out how to pay it off. Will you take the “pay what you can” approach, where from month to month your payment may vary from $100 to $1000? What if you have $20,000 in credit card debt? There’s no way to tell exactly how long it will take you to pay off your creditors, but it’s a safe bet that with a payment history that looks like that, it doesn’t matter what you send in each month – you’re probably still using the card regularly and not seeing any reduction in the balance. That means the appropriate answer to “when will I get out of debt?” is “Never.” Oh but don’t take my word for it, just keep using that card until you figure it out on your own.

Will you pay the monthly minimum payments only? Take a look at the back of your statements. Federal Law requires that creditors print how long monthly payments will take for consumers to get out of debt. Many consumers may start out with, say, $50,000 in credit card debt, but end up paying well over $200,000 over 40 years to zero out their balances. Compare that to your current mortgage. Are you prepared to pay more for your credit card debt than you are for your home?

One other option, which is becoming more and more widely available thanks to its tremendous success rate, is enrolling in a credit card debt relief program, such as debt settlement. Because everyone’s situation is different, there are many different programs available. A little bit of research makes it easy to determine which of these will be the best fit for you. Just by searching for “debt relief” or “avoid bankruptcy” online, many great companies’ sites will appear. The wisest thing to do is to speak with a handful of agencies about the programs they offer, and learn exactly what each of them will be able to do for you. Keep in mind, the best companies will have financial advisors that walk through a monthly budget with you, just to ensure that you understand full-well the depth of your debt and the implications of the program which you will be discussing. See it for yourself. Once you’re enrolled in a program, getting out of credit card debt becomes a reality. Look at your current situation. Really, deeply look at it. Is that something you can say now?