It’s so easy to get yourself into credit card debt but a lot harder to get out of. People often get caught out by introductory deals that offer zero percent interest and then find that they get hit by big interest payments when they fail to clear the debt during that grace period.
If that happens, you’ll soon find yourself buried under a mountain of debt. The good news is, there are lots of good ways to get yourself out of that debt, and it doesn’t always take that long. However, there are also some very bad ways to pay off credit card debt. If you try using one of those, you’re only going to get yourself into a bigger hole.
There’s a lot of advice online about how to pay off credit cards and some of these bad methods pop up very often. To help you avoid taking bad advice, read through this list of the worst ways to clear credit card debts and some better alternatives.
#1 More Credit Cards
People will often tell you that it’s a good idea to find a new credit card deal with a zero percent interest period and use that to pay off the old one.
The thinking is that you won’t be wasting money on interest payments and you can clear the debt before interest kicks in again.
But the thing is, you didn’t pay the debts off in the grace period last time, that’s how you got into this in the first place.
What makes you think it’ll be different this time around? It’s true that some people do manage to pay off their debt by doing this but it’s problematic for a lot of others.
What usually happens is that you just prolong the cycle of debt and if you start getting loads more credit cards, it’ll be harder to keep track of all of the different payments.
There is a better alternative though. The concept of moving the debt around isn’t completely flawed, but credit cards aren’t the way to do it. Instead, you should look for debt consolidation companies that can combine all of your debts into one easy to handle payment.
There’s a lot of different ones out there so it’s always worth looking at some reviews to find the best ones. Don’t just look for which ones can give you the best interest rates because, although that’s important, the value of these companies is often with the help and advice that they can give you.
#2 Borrowing From Friends And Family
The reason that this is often given as advice is that a friend or family member isn’t going to charge you a big amount of interest or chase you up for repayments so it gives you a bit of breathing room.
However, it’s likely to cause more trouble than it’s worth. If you can’t make repayments on time and the person that you borrowed from needs that money, it’s going to cause a big problem in your relationship. If things get too bad, it could end your relationship completely.
It’s not advisable to ever borrow money from family or friends unless there’s absolutely no other way to get out of debt.
#3 Borrowing Against Life Insurance
If you’ve got a life insurance plan, you’ve got the option of borrowing against it. There is a right way to do this and if you’re 100 percent sure that you can pay the money back into it before you die, you should be ok.
However, if you don’t pay it back on time, the rest of the balance will be taken off the settlement that your family gets.
This can land them in some serious financial trouble during a very difficult time. The thing is, you never know what could happen so it’s always an incredibly risky move.
#4 Selling Things
This is often people’s last-ditch attempt to get out of debt and you can get the money to pay off your credit cards by doing this.
The thing is, if you sell off all the old stuff that you don’t use anymore, you probably won’t make that much money. If you’re going to get enough to clear a big chunk of credit card debt you’ll have to start selling off things like your TV or your car.
That’s all stuff that you use regularly and the chances are, you’ll realize that you can’t really do without them and end up buying them again, often on credit if you don’t have the spare cash.
On the face of it, these things seem like a good way to clear your credit card debt but they’re actually very problematic.