What are some bad credit card debt practices?

What are some bad credit card debt practices?

| Apr 21, 2021 | Firm News

For every piece of good advice regarding getting out of credit card debt on the internet, there is a lot of dross. It is vital for you to understand what is a solid debt payment strategy and what will simply set you back further.

Debt often comes bundled along with other major problematic events in our lives, like unemployment, natural disasters or health issues. It is very easy to feel overwhelmed. However, even if you are feeling very overwhelmed, remember not to pay unsecured debts at the expense of secured debt, and do not do anything based on what collectors are pressuring you to do.

Unsecured debts vs secured ones

A secured debt is a debt associated with collateral of some sort. For instance, a car payment is a secured debt since if you do not keep up on your car payments the lending institution will repossess your car. A home mortgage is another example of secured debt.

Even if you have overwhelming credit card or medical bills, you should never choose to pay an unsecured debt like these at the expense of your secured ones. This is because you may end up losing the collateral if you do not pay the secured debt. It is highly unlikely that losing your home or car will make your credit card debt situation better, in other words.

Stay cool under pressure

Debt collectors are going to try anything they can in order to get you to pay them. Many stressed out individuals end up withdrawing money from retirement savings or accounts, and this is almost never a good idea. Instead, make sure that you give yourself the time and space necessary to research your options.