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Aug 27, 2019 11:41 AM EDT

Do Not Fall Into the CC Debt Trap

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Personal finance can become rather tough, regardless of what phase in life one is currently in. As a result, many individuals look to credit cards as the solution for their financial problems. The credit cards provide quick financing and a relief in a personal economy that few other options can provide. 

However, this seemingly sweet solution can turn into, and most certainly have many times, a nightmare for the individual. The CC debt trap is real, and many individuals fall into it annually. Oftentimes the trap gets so tough to get out of that many stay in it until they file for personal bankruptcy. How might one avoid the CC debt trap, and what should you do if you end up in it?

How Can I Avoid Credit Card Debt?

The most simple way to avoid credit card debt is of course to avoid getting a credit card balance. However, the problem obviously stems from earlier issues. It is very likely that an individual ending up in credit card debt had a tough personal economy to begin with, and that the credit card was an attempt to relieve some of the pressure. 

Following, avoiding CC debt starts with fixing your personal finances from early on. Although the advice might sound like a broken record, one needs to put serious thought into budgeting and saving. First and foremost budgeting helps you avoid unnecessary spending, whereas saving allows you to have a buffer in emergencies. 

That way, when issues arise such as your car breaking down, you lose your job, or other economical struggles come your way, you have a savings buffer to rely upon rather than applying for a credit card. This might seem easier said than done, but it all comes down to creating a strict discipline for your own finances from the very beginning of adult life. 

Alternatives to Credit Cards

If you end up in need of an alternative to a credit card, there are many good options out there. The best option is possibly prepaid credit cards as they provide you with the flexible spending, but they do not bring you further into debt. There are many alternatives here, as both reputable banks and retailers offer this option to its customers. 

One might ask why an individual does not simply just open a bank account for this purpose. However, the fact is that 40 million Americans do not have bank account. Many avoid it due to credit card debt and bounced checks, since the bank would not approve them for an account anyways. 

For these individuals, a solution to pay with a card is certainly beneficial. After all, few individuals would be able to imagine only paying by cash. A card is simply way more practical, and in addition, many of the cards offer great rewards that regular credit cards usually reel in their users on. 

How Do I Get Out of the CC Debt Trap?

If you have fallen into a CC debt trap, chances are you have failed in your personal finances. Many think this is merely correlated to discipline in spending, but oftentimes only a few bad decisions, that were taken based on lack of knowledge, has led you to where you are financially today. 

In an attempt to get out of what seems like a hopeless situation, there are many steps to take. For starters, you need to contact your credit card company/companies and try to renegotiate payments if you do not have the monthly income to serve the interest rates on your debt. 

Furthermore, a budget needs to be clearly established so that you can pay off the debt according to the payment schedule provided by the credit card company. After all, if failing to pay them, you only dig yourself even deeper into debt - a common case with most individuals in credit card debt, as they also apply for even more credit cards. 

In order to serve the debt, extra measures need to be taken. For instance, getting an extra job on the side is obviously beneficial for extra income to serve the loan. Finally, as a last resource only, family members can be asked for lending money - however, this should only be a last resource, as mixing family and personal finance is rarely a good idea. 

Enjoy a Free and Prospering Personal Economy

Steer away from the CC debt trap, or work your way out of it, and enjoy a free and prospering personal economy. With a buffer saved up for instance, there is no need to panic when unexpected financial needs arise. 

Too many individuals fall into the CC debt trap, simply because they are not prepared for what personal finances might throw at them. Start your budgeting and saving early, and do not fall into the CC debt trap!

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