Being in debt is an unnecessary cause of stress. American household credit card debt is currently reaching $420.22 billion. These numbers are a sign that people are relying too heavily on credit for day-to-day expenses.
Is this a sign that the country is headed for trouble? It is hard to say, but it is a sign that Americans have a personal debt problem. As interest rate climb higher, borrowers will have a harder time paying off their debt.
If you are concerned about debt, consider seeking debt relief services. Continue reading for seven reasons why people buried in debt will stay in debt.
1. They Do Not Know They Are in Debt
A lot of people do not know they are in serious debt until they begin to fall behind in bills. Another wake-up call is when they need to make a major purchase and get declined. If your options include a high-interest loan or a secured loan, then your debt is impacting your credit.
2. High-Interest Rates
Utilizing credit with high-interest rates keeps consumers buried in debt. The higher the interest rates you are paying, the higher your monthly payment will be. Most people do not realize the damage until they are close to maxing out the card’s available balance.
3. People in Debt Pay the Minimum
Paying the minimum balance is a guaranteed way to stay in debt. People in debt make the mistake of thinking that paying their debt on time is all that is required. Credit utilization is the second biggest factor on your credit score. Utilizing more than 30% of your available credit will have a negative impact.
4. They Keep Charging New Expenses
Although most people realize they are in serious debt, they keep spending. Even when they pay down the debt on a card or line of credit, the temptation to buy more keeps them in debt.
5. No-interest and Delayed Billing Promotions
Accepting delayed billing or no-interest promotions is not a bad thing. The issue is not paying the purchase off before the promotion period ends. Not only will you get charged the back interest, but the unpaid purchase will also raise your monthly payment.
6. Refusing to Negotiate with Creditors
A lot of creditors are willing to work with consumers. Give them a call to see if you can get a lower interest rate. If you are behind, try negotiating a repayment plan before going into collections. Debt collectors only add to your stress.
7. Will Not Seek Debt Counseling
Debt counseling and relief services are available to those struggling with debt, but most people will not seek their services. Their specialists can provide unique strategies that can reduce debt quicker than traditional methods.
They can also provide financial advice to prevent being in debt down the road.
Are you Ready to Get Out of Debt?
Getting out of debt requires commitment and a plan. Understanding what keeps people in debt will help you recognize why it is important to break the cycle.
Do not hesitate! Click here to learn how Effective Legal Debt Solutions can help you seek the debt relief you deserve.
The Effective Legal Debt Solutions team is comprised of caring, seasoned professionals with years of industry knowledge coupled with personal real-life experience of dealing with debt settlement situations that many of our clients are facing today.