How To Pay Off Debt With No Money

How To Pay Off Debt With No Money

Credit card debt is one of the most common types of debt and often times the hardest type of debt to pay off. While you may only owe a couple of thousand of dollars on your credit cards, if you are only paying the minimum amount due you could actually end up taking several years to pay off the credit cards and in total pay more than double the amount you actually owe. To avoid this problem, it is imperative that you pay off those credit cards as quickly as possible. As we all know; however, that can be easier said than done. Read on for several tips on how to pay off debt with no money.

How To Pay Off Debt With No Money

Start off by looking at your current budget.  There are online budget calculator and budget worksheets that can help you manage your budget better.  Understand your expense is step to paying off your debt quickly.   http://www.ourdebtfreelives.com has some great articles on decreasing your budget, which will allow you to come up with some extra cash you didn’t have before.

You should take in paying off your credit cards is creating a habit of paying more than the minimum amount due listed on your monthly statement. Generally, the minimum amount due represents only about 2% to 3% of the total balance. Keep in mind that paying only this small amount will take you that much longer to pay off the entire balance and that costs you even more money. Pay as much as you possibly can over the minimum amount due. In the end, you’ll pay off the cards faster and actually save a ton of money.

If you have more than one credit card, take the time to sit down and find out which ones have the highest interest rates. These are the credit cards you need to focus on paying off first because these are the ones that are costing you the most money and will take the longest to pay off. When you finally pay them off you can take the money that you were putting toward paying off that card and apply the same strategy to the next highest interest rate credit card.

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Another way you can pay off your credit cards is to take money out of your savings account and investments. Of course, this wouldn’t be the first choice of many people; however, when how much damage you could be doing to your financial future by not paying off those debts you can quickly realize that it will actually benefit you more to just bite the bullet and pay them off. Then you can focus your attention on building your savings and investment portfolio back up.

You might also consider taking out a home equity loan, if you own a home. With the money you receive through the loan you can pay down or pay off your debt and also obtain a much lower interest rate on the new loan than what you currently have on your credit card debt. In addition, for most people, the interest on the home equity loan will be tax deductible, which your credit card debt certainly is not.  Related Article: Debt Settlement Company

Hidden Facts About Credit Card Companies

Credit Card Companies & Credit Card Debt

Credit card debt is the most common contributor of debt for most people; however, very few people know exactly what credit card companies are allowed to do and not allowed to do when it comes to their credit. Understanding what boundaries credit card companies must abide by can help you to become one step closer to better managing your debt.

First, it is important to understand that contrary to popular opinion credit card companies have the absolute right to raise your interest rate automatically. They can even raise your interest rate if you’ve never been late on a single payment for that credit card. If you are late on any other bill credit card companies can use what is known as a universal default clause to raise the interest rate on that credit card.

Due to increasing public service announcements many people are beginning to understand that their credit score is more important than they may have thought, especially in terms of applying for additional credit. What you may not know; however, is that your credit score can also help to determine the interest rate on your credit cards. The lower your credit score, the higher your credit card interest rate is more likely to be.

What you need to know about credit card companies

Many people may also not understand that credit card companies are not bound by any limits in terms of what they can charge for late payment fees as well as penalties. You may think there is a cap on such items, but in reality the limits were lifted back in 1996 after a monumental Supreme Court case was settled.

In addition, the Federal government does not place any limit on the amount of interest that credit card companies can charge you. Many people believe that credit card companies cannot charge them more than a certain percentage due to government usury laws.

The truth is that these laws were lifted a long time ago, after the Great Depression, as a matter of fact. Furthermore, certain states have usury laws that are either very lax or non-existent. With these type of leeway credit card companies practically have free reign to charge you whatever they want.

Finally, be aware of the fact that it is not big item purchases such as cars and homes that land most people in bankruptcy court. Rather it is credit card debt that causes most problems, simply due to the high interest rates that make it incredibly difficult and time consuming to pay them off.