- 1 Pay Off Credit Card Debt With Personal Loans
- 2 Most of the Credit Card Debt Was Taken Before the Pandemic
Many Americans have to pay off credit card debt, with high-interest rates. As of April 10, 2020, there are more than 495,000 confirmed cases of coronavirus and over 18,300 deaths in the United States. Financial instability continues to pick up pace as the COVID-19 coronavirus poses a serious risk to physical and financial health. JP Morgan predicts 20 percent unemployment and 25 million job losses.
Pay Off Credit Card Debt With Personal Loans
A personal loan can be a great idea if you have outstanding credit card debt and a less then perfect credit score. If you are approved, and you use the personal loan to pay off the credit cards, you will almost certainly have a better interest rate than the credit card. Personal loan sites provide an opportunity for consumers to compare reviews of lending companies like Hornet Partners, Polk Partners, LadderAdvisors com, Americor Funding Reviews, and Credit 9.
According to a recent survey on the credit card debt of Americans in the ongoing pandemic, it was found that 59% of cardholders in the country were already knee-deep in credit card debt. This means that roughly 110 million Americans are drowning in credit card debt.
According to an industry analyst, the coronavirus pandemic comes off as a grim reminder that circumstances can change anytime. As a consequence, what was once expected as a manageable financial issue has now created an air of financial skepticism everywhere.
Most of the Credit Card Debt Was Taken Before the Pandemic
The survey noted that among people with high-interest credit card debt, a significant portion had been carrying balances for quite some time. Only 38% of these credit card holders carry a balance that dates back to the last 12 months. Overall, 56% of them have carried their debt for more than a year, whereas 15% carried it for more than five years. There are even those (7%) who don’t even remember the year they started accumulating credit card debt.
Currently, we are going through a difficult period, following years marked by low unemployment and economic expansion. Therefore, people who were already finding it hard to pay before have a bigger mountain to climb.
Almost 49% of credit card debtors revealed that they were experiencing stress regarding their balances, whereas 13% disclosed that they were “very stressed.” Lower earners, younger generations, and parents with children under 18 are the most vulnerable demographics to stress.
Why Is Credit Card Debt So Common?
The survey explained that shopping sprees and superfluous spending were not the primary reasons behind such vast amounts of debt. Instead, many respondents were entangled in debt because they were finding it hard to make ends meet—a considerable chunk of their money went to necessities.
Over 26% of Americans divulged that their day-to-day expenses on utility payments, childcare, and groceries were the leading causes behind their debt balances. Similarly, 13% had to go for debt due to medical bills, while 12% and 10% of Americans were in debt due to car maintenance and home repairs, respectively.
Around 18% of Americans took on debt because of retail purchases, such as electronics and clothing, while vacation trips led 12% of the debtors to accumulate debt.
It is understandable you took on debt if you were using it to pay your day-to-day expenses or a personal or medical emergency. But, if you were among those who bought expensive electronics or went on a vacation, then it is the time to get serious. Create a budget and plan your purchases smartly to prevent paying for additional charges. This is especially necessary for over-spenders who are often caught between online shopping opportunities.
How to Tackle Credit Card Debt for Now
The emergence of the coronavirus pandemic has put many debtors in dire straits due to financial hardships and lost income. This calls for establishing better communication with your credit card issuer. Learn more about their relief programs and see what best course of action is for you at the moment. Here is what you should do:
1. Contact Your Issuer
If you have concerns about paying for your debt, it is a good idea to talk to your credit card issuer and request for assistance. Many credit card issuers have announced assistance programs for debtors hit by the COVID-19. Their solutions include waived fees, credit card increases, forbearance plans, and approved missed payments.
Carry a detailed discussion with your issuer and come up with a personalized plan that can raise your credit score by 200 points from getting affected by late or missed payments—factors that can severely dent your financial progress.
2. Opt for a Balance Transfer
If you have acquired a new stream of revenue or found extra money, you can try your luck with a balance transfer credit card. These cards are interest-free for a certain introductory period. See if you can qualify. The most efficient approach is to buy a balance transfer card that comes with a long introductory period, so you can easily pay back your debt before interest is charged instead of opting for a debt consolidation application.
3. Compare Personal Loan Rates
It is now possible to increase your credit score even if you already have a lot of debt. In fact, the best way to consolidate credit card debt is with the help of a personal loan. It may even be able to increase your credit score by as much as 20 points or even more.
4. Look for Credit Counseling
If you fail to come up with any viable strategy that can pay off your debt, you are worried about debt collection, and can’t even pay minimum payments, consider talking to a credit card counselor. These experienced professionals are up-to-date with the industry and can help you to create a plan that cannot only pay for your current expenses but also reduce your credit card debt. A legitimate accredited debt relief program is one way to avoid having to declare bankruptcy.
Once you fall into the dark abyss of high-interest credit card debt, it will linger on for ages, put your financial health in danger, and subject you to loan offers thare complaint magnets for bad reviews. The arrival of an unexpected event, such as a pandemic or economic recession, complicates the situation more.
Credit card issuers have come up with a lot of impressive relief programs to reduce the burden of debtors. The newly-announced federal stimulus package is also quite reassuring for Americans who are concerned about their credit card payments.
Pay attention to your spending habits and purchases that forced you into debt in the first place. Look for ideas and solutions that can increase your emergency savings, reduce your budget, and control your spending, so that you can pay off your debt quickly.