How To Avoid Bankruptcy with Credit Card Debt

Normally people worry a lot about reducing their debt and especially credit card debt. If not managed right credit card debt can often lead to serious debt problems or even bankruptcy.With so many people paying only the minimum payment required on their credit cards they will never pay off their credit card balance and are likely to increase their outstanding balance.

Credit card companies love it when people only pay the minimum payment required every month. With the high interest rates they charge they can rake it in. So when we start out with a credit card to pay for a few goods, our credit card balance can escalate into hundreds or thousands of pounds. As an example you balance is £4000 and you are paying the minimum payment which is £80 (2% of the balance), if you keep paying the minimum payment then all you are doing is paying the interest off that was added on the month before. Your balance isn’t really going down.

Credit card companies originally charged us around 10% for minimum repayments but found their customers were paying their debt back a lot quicker than they first hoped. Their plan was to reduce the minimum payment percentage, making it look like they were helping us out when in fact they were slowing down the repayment process and making more money for themselves.

So what to do if you find yourself in this situation:

If you have the luxury of being able to pay off your credit card balance then that is your best option. Alternatively you can consider switching your balance over to one of the 0% balance transfer offers which can be found on that will save you from paying any interest on your credit card debt from 12 – 15 months. Click Here to see credit card companies that have 0% transfer offers. Once the interest free period is over you can do the same again with another free transfer balance offer. There is usually a charge on transferring your balance over.

If you have more than one credit card and have too much debt to do either of the options above then you will have to play the percentage game. Work out which of your cards has the highest interest rate and make the highest payment to that card. Keep paying the minimum payment on the other cards until the one with the highest interest rate is paid off and then move onto the next card with the highest interest rate. Keep doing this until all your cards are paid off.

If you really have too much credit card debt and cant afford to pay anymore than the minimum repayments.
You many have to cut back on luxurys and tighten you belt a little. You may think you cannot live without your credit cards and yes, if used properly then they can be invaluable, but if you cannot afford to pay them off at the end of the month then you may be best speaking to a debt management company or even consider bankruptcy – depending on the severity of your credit card debts.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.


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