Credit Card Debt Clinic Advise

If you are still suffering from a case of post holiday card bill guilt, you are not alone. While making good on your resolution to pay down your debt is a terrific goal, you want to make sure you do so in way that actually improves your overall financial status. In other words, think twice before resorting to these sketchy debt pay-off plans.

Americans are loaded with credit card debt. The average American household with at least one credit card has nearly $15,950 in credit card debt in 2012, according to credit cards.com, and the average interest runs in the mid- to high teens at any given time. Teens under the age of 18 cannot apply for a credit card without a parent’s co-signature, but according to school loan provider, Nellie Mae, more than 54 percent of college freshmen carry a credit card. Nellie Mae also reports that on average, freshmen bring an average of $1,585 in credit card debt to college.

Teens credit card statistics issued by the jumpstart coalition for personal financial literacy shows that one out of three high school seniors use credit cards. Half of these students have credit cards in their own names.

Credit Card Debt Statistics in America

Statistic Verification

Source: Federal Reserve, Joint Economic Committee, Sallie Mae, Trans Union

Date Verified: 7.24.2012

Credit Card Debt Statistics	Data
Total U.S. credit card debt	$793.1 Billion
Average credit card debt per household	$15,799
Average household debt	$54,000
Percent of consumers that carried an unpaid balance in the past 12 months	56%
Percent who said their debt had gotten "higher" in the past 12 months	26%
The average balance per open credit card	$1,157
Percent of disposable income that went to service credit card debt	13.9%
Percent of families whose debt exceeds 40% of their income	14.7%
Average credit card debt carried by undergraduate college students	$3,173
Alaska has the highest average cardholder debt of	$7,827
Percent of cardholders whose balance is less than $1,000	40%
Percent of cardholders whose balance is above $10,000	15%
Average combined credit card limit per consumer	$19,000
Average debt of a college graduate	$20,000
Percent of 18 to 24 year-olds who have "debt hardships"	20%
Percent of survey who believe they had the same or less debt than the average	90%
Miami has the highest percent of yearly income owed to credit debt	22.61%
Percent of college students who have credit cards	76%

5 ways not to pay off credit card debt

1. Dipping into retirement savings

This is when you tap retirement funds that don’t serve their long- time interest. In this case, you are paying yourself interest instead of the card company which seems like a great idea, but as long as your loan is there, you are losing out on the compound interest you could be earning.”The other unwise decision is to withdraw from your individual retirement account. The 10% penalty alone can end up costing more than any credit card interest.

2. Taking out a payday loan

Payday loans are essentially very high-interest loans that provide an advance on your paycheck.”After you pay the fees and interest rate, you will pay more than you would have if you just continued to pay the card off,” Long says. The better move is to make adjustment to your pay check. There are ways to alter how much income tax you pay on a short term basis.” says Paula Ryan, The author of “Bounce Back from Bankruptcy.” This will give you more disposable income to put toward paying off those holiday bills quickly.” In a similar vein, if you expect a tax refund, you could file your return early so you can get the money to pay off bills faster.

3. Paying off your cards without a plan

If you owe a balance on more than one account, choosing an amount each month and divvying it up equally among accounts is not advisable, Gahler says. The same goes for paying just the minimum amount due on your accounts.”It will be hard to get out of debt for the long term that way, ”he says. The better move is to focus on the card with the highest interest rate first.

“Prioritize based on interest rate”, Gahler says.”If you have got multiple lines of credit, focus on the highest interest rate first.” The idea is to pay as much as you can afford on that account, While maintaining on-time minimum payments on the others. The exception :”If you have a small balance that is easy to just pay off, sometimes even if the rate is lower, It’s a nice little victory to say, ”I have got card paid off,” Gahler says.

4. Transferring balances

Using balance transfers can be an effective way to pay off a debt using a lower rate card. The danger lies in the limited grace period. People often end up using new card for additional spending without paying off the original balance before the introductory period expires.” Not only do they transfer the old balances, but they accrue even more, ”Long says. Gahler also added that with every new account you open, your credit score will take a temporary hit.

The better move is to use transfers sparingly, and crunch the numbers first. Calculate exactly what it would cost you each month to pay the zero interest debt before the zero interest period is up,” says author Ryan. Then pay that amount each month so you get the use of the credit card for free and get the debt paid off in full. ”Plus, most balance transfer cards charge a 2% to 3% fee, so if you are transferring  a hefty balance, you will be adding more to your debt load.

5. Borrowing from family

Relatives are preferable to some other lenders, but there are still caveats. Even if a family member offers you a loan without interest, it can make for awkward encounters if you don’t pay it back in a timely manner.

The better move is to save for the holidays all year long. The holidays are going to come around again, so the best way to plan ahead in your budget is to set aside some money each month to be able to pay for holidays shopping,” Gahler says. That way, by the time next December and January roll around, you have funds to pay for your purchases.

 Ultimately, there isn’t a magic wand for getting out of debt, it is really a matter of buckling down.”Stop using credit, pick a fixed amount you can afford, and pay that amount or more every month until the debt is gone.

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