Eliminate Personal Debt and High Interest Credit Cards

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Credit cards can be easy to obtain for many borrowers and when credit cards are used for purchases it is easy for debt to become insurmountable for the card holder. There are a number of ways to decrease overall debt and get finances back under control.

It is Possible to Negotiate With Credit Card Companies

Credit card companies do not want to risk that a borrower is going to declare bankruptcy because if a credit card holder does this, the company will lose out on the entire credit card balance. Ask for a lower percentage rate on the credit card loan to accrue interest on the outstanding balance at a lower rate.

If the credit card company won’t adjust the high interest rate, close the account. When the account is closed, interest continues to accrue but the account will no longer be active and no new purchases can be made.

Debts With the Highest Percentage Rates Should be Paid First

Think of the total amount of debt accrued as one big loan and it will be easier to accept that the higher the interest rate of a particular credit card or debt, the quicker it should be paid off. Some borrowers pay a little each month on every loan or debt accrued and this only keeps the borrower in debt.

Pay any extra money each month on the highest percentage rate debt first and pay minimum payments only on all other debts. When the high rate debt is paid off first, the overall percentage rate of the entire amount owed decreases more rapidly.

Do Not Use High Rate Credit Cards and Close the Accounts

Debt will never go away if credit cards continue to be used. To get rid of debt one must stop creating debt. One credit card can be saved for emergencies, but it is imprtant to remember that a new outfit is not such an emergency. Only use credit if absolutely necessary if you are working on a debt reduction plan.

Use No Interest Credit Cards to Transfer Balances

Credit cards with a no interest introductory period are perfect for borrowers who are working hard on a debt reduction plan. When no interest credit cards are obtained, transfer as much possible of the highest interest credit card balances. If a high interest credit card is now paid, close the account and move on to the next highest interest credit card balance.

Putting balances onto a no interest card removes the high interest from the balance that is transferred from an existing high interest loan and allows the borrower to focus payments onto other high interest loans. A no interest credit card immediately reduces the total percentage rate of the entire debt amount and makes the overall debt more manageable.

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How to Avoid Payday Loans

If you have ever wondered how people get caught up in the cycle of taking out payday loans to help them from one paycheck to the next, you have to realize that many people did not plan for things to happen that way. You never know what life has in store for you and what unexpected event is doomed to occur.

Unfortunately, many people live their life thinking that nothing will go wrong, until it does. If you are not financially prepared, you might require short-term loans to help you get back on your feet. Depending on how quickly you need the money and how good your credit history is, you could end up applying for instant loans.

Once this occurs, you could end up in the same financial situation as the people you once wondered about. Without any savings to fall back on, the cycle can rapidly become vicious if you do not find a way to recover. Suddenly, you find yourself taking one payday loan after another, until you stop living paycheck to paycheck.

Sadly, this is how many people get sucked into the payday loans vortex. What can you do to avoid payday loans and, with them, getting overwhelmed by debts?

Understanding payday advances

Sometimes, you have to fully understand the danger, for it to have meaning and for you to learn to avoid it. Instant payday loans are short-term solutions to financial emergencies. They are designed to help people who cannot or do not want to utilize traditional loans. The loan comes in small amounts determined by your income and are meant to help you until you reach your next paycheck.

Payday loans should only be used for emergencies. They are not meant to be spent on frivolous things, such as shopping trips or weekend outings. The interest rate can be high, but, compared to paying late fees, reconnection fees, or being late on your rent, it could be worth paying.

It is wise to pay off the loan on your next paycheck, in order to reduce the amount of interest and fees that can get tacked on if you stretch out the payments.

How to avoid payday loans

The most important thing you can do to avoid payday advances is to be prepared. Do your best to set aside some money with each paycheck. Even if you cannot save the suggested 10%, anything that you can tuck away could be of help later. Would you not rather borrow money from yourself, in theory, than from a lender charging you $15-$25 dollars per hundred?

Try to make sure you are covered for emergency situations that normally cause people to borrow money. For example, you can avoid emergency medical expenses if you purchase health insurance. Get an extended warranty on your car, if possible, to cover costly car repairs. Live within your budget, so as to avoid living from paycheck to paycheck. Being prepared might cost a little up front, but, in the long run, it can help you avoid payday loans.

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