A Financial Nightmare: Credit Card Debt - By: Alice Shown

Have you ever felt like your financial life is out of control? If your worst financial nightmares are reality, you are not alone; the number of Americans with excessive credit card debt continues to rise despite economic strains. According to cardtrak.com, the average American household has around $6,600 in credit card debt. And, with interest rates as high as 28% in some cases, digging out of such a hole is nearly impossible. Take a glance at some of the reasons Americans fall into and remain in credit card debt, as well as a few helpful tips for regaining control in financial madness.

First, the majority of Americans do not adequately understand the terms and conditions of their credit card contracts. These are often in fine print and can be a mini-booklet in length. They are generally designed by lawyers to be difficult to understand. In any case, this leaves the consumer especially vulnerable to making blunders that warrant late fees and interest rate hikes.

Timing is one of creditors' greatest tools for deception. Generally, if a consumer makes a payment even one day late, they are slammed with late fees and the card's interest rate is raised. In some cases, interest rates have been raised from just 9% to nearly 30%. At these steep rates it is doubtful that the debtor will be able to pay off a balance in full each month, and the debt becomes 'revolving' debt, a form of financial cancer. Revolving debt consumes large portions of monthly income without bringing in many real goods or services, because it is mainly comprised of interest and fees.

And these rate hikes and late fees do not take into account unforeseen detrimental circumstances faced by the consumer. As unemployment, divorce, or illness often force consumers to make only the minimum payment while they struggle to make ends meet, it becomes even harder to pay off balances in full.

Further, rising debt may only serve to worsen any existing health conditions as it contributes to increased anxiety levels. A study conducted by Ohio State University School of Public Health the link between financial hardship, illness, and stress and anxiety among women. The study found that women with a major illness, in this case cancer, were more likely to have increased levels of anxiety. They were also more likely to exhibit signs of clinical depression with increasing financial hardship.

This is just one example of how excessive credit card debt is an especially dangerous trap when life deals unexpected circumstances, like illness. Thus, it is vital to pay off any credit card debt quickly and efficiently. Begin by tackling debt with the highest interest rates first. Budget your largest monthly payments toward these balances, as they are the ones you will pay the most on over time. Once these are paid off, apply that budgeted amount to the next balance and so on until all the balances are paid off in full.

Also, avoid scams when seeking professional help to resolve debt. Many fly-by-night debt settlement companies make claims of settling debt for as little as 40% of what was originally owed, but in reality collect outrageous upfront fees without delivering results. Even so, there are legitimate debt settlement companies out there. A reputable debt settlement company will settle at least one of your accounts before ever accepting service fees, and are actually mandated by the FTC to do so.

Though your finances may feel like a nightmare, there is hope. Take the time to explore realistic ways of eliminating debt one step at a time.

About the Author

If you have a serious problem with credit card debt, visit superiordebtrelief.com for help.

Article Directory Source: http://www.articlerich.com/profile/Alice-Shown/77736

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