The Dangers of Credit Card Debt

Did you know that the average credit card debt in Australia is almost $3000 a month? Chances are if you are a current credit card consumer that you might be part of the stats. Even if you are not you should be aware of the fact debt could ruin your life. Once you are in a tight financial situation it is very hard to consolidate your debt and get back to normal. I think the problems start at school, most young school kids are not educated in handling money. So it is down to the parents to educate the young on handling credit cards. But because we are given credit cards left right and center, it is very easy for just about anyone to apply for credit cards and get them approved. New credit card laws will come into effect in 2010 and that will make it a lot harder for lenders to hand out credit cards to the wrong people. But in the meantime you are left to deal with your own devices.

If you are currently battling credit card debt there are ways for you to handle this. One of the best solutions to counteract debt is to use a 0 balance transfer credit card. These cards will allow you to transfer your existing balances to the new card and repay your debt. 0% means that you can transfer your total debt with 0 interest. However you will have to pay a balance transfer fee which usually is around 3% of the total balance. For every hundred dollars you owe on your card you will be paying about three dollars to the lender of your balance transfer card. But this is still cheaper than keeping your current interest rates which are most likely very high. Because balance transfer cards don’t have interest, at least not during the introductory period, or else the interest rates are very low you can concentrate your efforts on paying your debt by putting as much money as possible onto your card each month. The more money you can spare from your wages, the quicker your debts will be paid off.

If your balance transfer term is for six months you will need to make sure that after the six-months you are debt free. If you are not, you will end up paying higher interest rates than ever before, because most balance transfer cards revert back to a high interest rate after the introductory period runs out.

The longer you wait to manage your debt the harder it will be. Worse still, you’ll end up with a massive debt and you will be unable to apply for mortgages, loans, or other credit cards, simply for the fact that you will end up having a really bad credit rating. Once the credit rating is ruined it will be quite hard to rectify your financial situation to buy large purchases such as a car, a house or even a holiday. You simply won’t get the money to buy these things from a lender. In the worst case scenario you can declare bankruptcy. But this should always be your last resort, because once you have declared yourself bankrupt, your credit file will be affected for seven years and potential lenders can see this on your file, therefore denying you any money.

As you can see it is imperative that you handle your debt as soon as possible with a 0% balance transfer card today and be debt free within the next six months.

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