One of the enemies that will keep you buried in credit card debt are the late penalty fees. There are many reasons why you can be late on your payments. You may have forgotten them or mixed them up with another account’s due date. Or you simply do not have enough money to pay off all your minimum requirements and thus you had to default on some of them.
Regardless of the reason behind defaulting on payments, one thing’s for sure, you can expect an average of $35 to be added on your next month’s bill. That amount plus your current balance will be the basis for the interest amount that you have to pay on top of that sum. Sounds unfair right? Well that’s how credit card companies get rich.
So here’s the solution: never be late on your payments. Do not waste anymore of your limited resources in paying extra towards your credit card. It’s easier said than done but there are ways to help you achieve this – and it goes beyond merely being organized.
Debt consolidation is a great way of making sure that you will never have to pay for late penalty fees again. The single payment plan that you will be subjected to will keep you from confusing one payment for the other. In debt management, you get to work with a debt counselor who will literally manage your debts for you.
At the beginning of the program, you will come up with a debt management plan that is based on your payment capabilities. You will enjoy a lower monthly payment because your current debt will be stretched over a longer plan. When this new plan is approved by the creditor (which usually happens because there is no actual debt reduction), you get to make a single payment towards your debt counselor. They will take charge of distributing your payment to the different creditors you enrolled in the program. They will make sure that the payments will come on time – thus eliminating late penalty charges.
On the other hand, if you use the other method of consolidating debt, you erase the late payment fees because you completely pay off your credit card debts. Debt consolidation loan involves applying for a loan that is big enough to pay your other debts. Once paid off, you will concentrate on this one loan – thus making payment a whole lot easier. If you use a personal loan, you can get a low interest rate if you have a good credit score. This will help make your monthly payments smaller. But if you do not pass that requirement yet you possess a collateral, you can get a secured loan – which is ideal for the low interest that it provides borrowers.
These are great options to make sure that your debts will no longer increase because of late penalty charges. Of course, practicing proper financial management is also a good habit to develop. These include budgeting, saving and making smart purchases. If you practice this, you can keep your finances in order, boost your financial safety net and you will keep yourself from making your debt payments worse.