Top Five Signs of Debt Problems
Introduction
Sometimes the best way to handle a problem is to understand how it started in the first place. Debt management services presents the top five most common potential causes of debt problems.
Debt Problems – Are They Justified?
Most people are stuck with debt problems because of some common and repetitive financial blunders that could easily be prevented. Even an unfortunate circumstance like an accident or a job loss could be handled well if budget and savings are planned intelligently. All you need are certain behavioral changes and a little bit of discipline. Experts from debt management services point out the following top five mistakes that commonly lead to debt disaster.
Mishandling Balance Transfers
Transferring balances from high-interest credit cards to low-interest ones can be an effective solution for handling debt problems only if you read between the lines. Once the introductory rate expires, the credit card companies will charge you a different interest rate, which typically turns out to be much costlier than it was before the balance transfer.
Minimum Payments Towards Credit Card Debt
As a responsible debtor, you pay the minimum amount every month towards your credit card debt. So what’s wrong with that? Well, with small payments it can take decades to pay off your debt. Plus, it can lead to a poor credit score. Hence analysts of debt management services recommend paying a little more than the minimum amount toward your credit card debt each month.
Late Credit Payments
Did you know that a delay of a mere 30 days in your credit card payment can triple your interest rate or prompt your creditors to slap you with a default interest rate? So better to be punctual with your credit card payments if you are serious about your debt problems.
Not Informing Creditors about Forthcoming Economic Hardship
Don’t wait until economic hardship hits you. If you come across a forthcoming financial disaster that you know is imminent, call your creditors immediately and explain your situation. You never know, they might extend your pay off time period or lower your interest rate. But, of course, the information must be justified.
Absence of Emergency Fund
You might not think about it every day, but financial emergencies will definitely happen at some point in time. The question is whether you are prepared to handle it or not. Even a single accidental medical coverage can cause your interest rate to go up, thus augmenting your debt problems. That is why debt management services agencies insist that an emergency fund is a mandatory requirement.
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