3 common credit card debt myths
The U.S. has already reached a new milestone in the first month of 2018. According to people at the Federal Reserve, the total amount of credit card debt in the United States has exceeded over $1 trillion. This is a new high, and it should be a wake-up call to many people to get their finances in order.
Whether you have a few thousand dollars in credit card debt or over $50,000, there are steps you can take to try to get some relief. One option is bankruptcy, but it is not the right course of action for everyone. No matter which route you take, you should be aware of the various myths out there surrounding credit card debt so you do not make matters worse.
Myth #1: Credit cards from retailers are good
It may sound enticing to get a credit card from a retailer you go to often, but if you want to decrease your chances of incurring a lot of debt, then avoid them at all costs. The reason is that these cards may come with a few months of interest-free financing, but after that, you often get hit with a huge interest rate. Some cards have rates exceeding 20 percent annually.
Myth #2: You are fine if you only make minimum payments
Your credit card will have a minimum payment, which is usually something manageable. It may be in the vicinity of $100 a month. You may think you will be fine as long as you pay that every month, but you only hurt yourself in the long run. If you will attempt to pay off the debt on your own, then increase your minimum payment. If the minimum is $100 a month, then try to pay $150.
Myth #3: Bankruptcy discharges all debts
Filing for bankruptcy may seem like the perfect solution. However, it will not fix everything. You are still responsible for paying any owed taxes and medical debts.