Credit Card Debt Can Lead to Bankruptcy
With inflation reaching double figure everything has become so costly, most of the income is going in buying things for daily needs. Most of the banks have already hiked lending rates and others will be following soon. Hence most of us especially owning credit cards must be thinking of putting aside the payments for later without realizing that we are getting into credit card debt. Due to this most of us will end up paying a tremendous amount in interest just to obtain the item or service now.
In India banks charge 3.15% interest rate on credit cards. On some cards bank offer low interest rate as introductory offer but one thing we should know that this interest rate is coupled with the fact that default or late fee will shoot up the interest rate. Then it would become difficult to repay debt. Even the minimum payments will be more than that one can afford to pay.
Therefore some smart people try bankruptcy to escape from credit card debt. In fact bankruptcy is an option that has to be considered when an individual cannot pay their debts as they fall due. Bankruptcy proceedings can free you from overwhelming debts so you can make a fresh start, subject to some restrictions. Yes there are some debts that cannot be eliminated through bankruptcy. Those debts include student loans, recent taxes, etc.
Though bankruptcy idea is useful but you can avoid this by keeping all your payments up to mark. Always pay more than the minimum in your credit card balances. You should always pay as much as possible since credit cards carry the highest interest rates. Though you should also keep check on the interest rates charged along with any other costs and fees. First of all pay for essential services and expenses. Then immediately try to cancel the highest interest debt. If you have more than one card then first do away with the payments of the card with high interest rate and surrender that card as it is more advisable to keep one card with low interest rate.
Nobody know what is going to happen in future, therefore one should start preparing for the unexpected. To avoid getting in debt always make a budget and stick to it as tight as possible. Include all your income and expenses, including your debt installments and an average of credit card payments while making budget.
Make a plan to reduce your debt progressively. If possible take a low interest loan to pay off your credit card debt, and then you should make payments above the minimum in order to keep reducing your debt. After getting out of debt you should avoid incurring into more debt and you should always keep your budget balanced.
Apply for best credit card in India and get your free credit card today.
Source: http://ezinearticles.com/
Added: July 3, 2008
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