Credit card debt is one of the most difficult financial situations to deal with. It’s something that can keep you up at night and hangs over you, weighing you down. However, that doesn’t mean you can just do anything to get out of debt. Here are just a few ways NOT to pay off credit card debt.
Taking Out a Payday Loan
If you’ve gotten behind on credit card debt, you may think that going with a payday loan is the answer. It’s not. In fact, you’ll find yourself in an even worse position. The fees and interest rates on payday loans are astronomical. You’re not paying off your debt. You’re simply trading one debt for another. Don’t do this.
Getting a Home Equity Loan
Never, ever get a home equity loan for anything like credit card debt. It’s not worth risking your home to pay off credit cards. In fact, most things aren’t worth risking your home for. If you can’t make those payments, you risk losing your home. Is there anything worth that risk short of lifesaving medical care?
Transferring Balances
Another way people transfer debt from one place to another is transferring the debt to another credit card. In most cases, this doesn’t help anything. You still have the debt. It doesn’t magically go away. The only time this makes sense is to consolidate your debt onto one card that has a zero-interest rate. If you can pay off that debt during the zero-interest time frame, then do it. If not, you’re just making things much worse.
Borrowing from Family
If you thought owing a credit card company was bad, owing family can be even worse. Every purchase you make will be scrutinized by those that you owe money to. You will constantly feel like you have to explain yourself. No one wants that.
Paying Debt Without a Plan
Last, but not least, do not pay credit card debt without having a plan. You want to create a plan that allows you to see progress. For example, some people choose to pay the lowest debt off first, while others choose the highest interest rate card to pay off first. Whichever you choose, you must have a plan.
Credit card debt is not fun, but you can’t make rash decisions. You want to take the time to have a plan and come up with money in a responsible way, such as working extra hours or selling items you no longer need. Don’t make the mistake of trading one debt for another or borrowing from family.
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