It is doubtful that there has ever been a more insidious or destructive financial or credit related product ever created that exceeds that of compound interest credit cards. Credit cards have destroyed more lives, families, hopes and dreams than perhaps any other financial product with perhaps the possible exception of the mortgage. Due to their ease of acquisition and use, they have become extremely attractive to most of the American population. Add to that fact that the financial and credit industries have purposefully engineered things to the point that it becomes difficult to function in daily life or business without a credit and it only compounds the problem.
Why are they so bad?
Simple, they induce you to purchase things that you cannot afford and then charge compound interest making it virtually impossible to pay off without extreme focus and financial planning.
How to Avoid?
The best strategy is to avoid them at all costs. Many will argue that they are financially responsible enough to use them and pay them off every month thereby gaining the financial float of investing arbitrage since they are not being charged interest if they are paid off in full every month. This is similar to dancing on a razor blade. One misstep and you end up bleeding. So, the best strategy is avoidance. If you cannot pay for it, you don’t need it and you certainly don’t need to pay three times the price of the item for the luxury of having it until you can afford it (that’s generally what you end up paying when you carry a balance).
But what do you do if you didn’t receive this little nugget of information timely enough, you borrowed on credit cards and ended up in credit card default because you couldn’t afford the ever increasing compound interest payments?
If credit repair is important to you, follow these steps to get the derogatory item legally removed from your credit report and move on with your life:
1. Debt Validation (if the account has been sold to a collector)
2. Debt Investigation (if the account is still held by the original creditor)
3. Investigate the statute of limitations for collection
4. Small Claims Court (if the collector or creditor violates the FACTA or FRCA laws)
5. Pay For Delete (If all else fails)
All of these options are much better for your financial future than options like bankruptcy or credit card debt settlement.