Just over half of people in America have some type of credit card debt that they carry from month to month. Over 90% of Americans actually have a credit card in their wallet, however. Yet, financial experts warn people all the time about the dangers of credit card debt. How can this debt be so bad if it鈥檚 so common?
The truth is that credit cards aren鈥檛 that bad for people with great credit ratings who can manage their money well. People in this situation are able to qualify for low interest rates, and they tend to have some savings so that they do not carry a balance most of the time. When they do have to carry a balance, they earn a high enough income that they can get their bills paid off quickly.
For everyone else who isn鈥檛 this fortunate, however, credit cards can be a very dangerous type of debt. For someone with poor credit, it鈥檚 entirely possible to be saddled with an interest rate as high as 29.99%. Without savings to fall back on, it鈥檚 very easy to let a few unexpected expenses force you into carrying a balance.
For someone with a high interest rate and the inability to make any extra money to cover their unexpected expenses (or even their regular ones), credit card debt can be next to impossible to climb out of. Every month a bill arrives with a minimum payment that just barely covers the interest charged that month. If you just make that minimum payment, you could be paying off your debt for years, even if you never add any other charges on the card. If you continue to make a few charges when you don鈥檛 have the money to pay your bills in cash, however, you might never get out of credit card debt.
<p data-sp-element=”content”>Fortunately, there is a way to get out of credit card debt even if you don鈥檛 have enough 鈥渆xtra鈥?money to make additional payments on your cards. A debt consolidation loan can combine all of your cards together into a single loan with a lower interest rate. That advantage alone will give you a lower monthly payment, freeing up some cash to pay other bills or build your savings. This way, when an emergency comes up, you鈥檒l be able to pay for it out of the money you have saved, helping you to avoid credit card debt forever.