Credit Card Pay Offs: Five Ways Not To Handle Them

By Tanya

Credit cards pay offs are something that we all dream of. The more debt piles up, the more stressed out and overwhelmed that we get. Sometimes it gets to the point where we are willing to do anything to rid ourselves of credit card debt and this can become a real problem. There are several ways to pay get of credit card debt but not all of them are smart. Most of us know how to pay off our debt the right way, but there are those who will do whatever seems fastest at the time. Below you will learn five ways not to handle your credit card pay offs.

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Your Retirement Savings

Even though you can use your retirement savings, you should avoid doing so at all costs. It is called retirement savings for a reason. In the short term it may not seem like such a big deal; especially when you are still young. However, when you reach retirement age you will find yourself wanting to go back in time to avoid making the choice to use it for paying your debt. Another thing to consider is that when you take from your retirement plan you will suffer a 10% penalty fee and this can end up being more costly than the interest on your credit card.

Payday Loans

Payday loans may seem like a very convenient way to pay off outstanding debt with ease, but what they really are is loans with extremely high interest that you have to pay back faster than you do your credit card bills. When you take a loan like this, you will pay more than what you actually owed on your credit card once the interest and other fees are added up with the original loan amount.

Home Equity

Borrowing against your home may seem like an attractive option when your mortgage rate is low and the interest on it is tax deductible. But by doing this you are simply paying off one type of debt (your credit card) with another type (your mortgage).

Balance Transfers

Credit card companies rope many people into doing balance transfers. While it can be a good way to pay debt off, especially when the new card offers no interest for a specific amount of time, the new card is a major temptation and many people will end up doing more unnecessary spending on it which will build up more debt.

Borrowing Money From Others

This is usually a bad idea no matter what the money is for. The main target for borrowing is family members which makes it a doubly bad idea. The main issue is usually not paying back the person on time or at all because they are family. This can cause strained relationships that would have otherwise been just fine.

Overall, there is no way that will magically get you out of credit card debt, but the best laid plans are those involving budgeting, spending management or consolidation.

Click here to compare credit card offers, including balance transfer credit cards that offer 0% APR and up to 5% cashback. Transfer your balances to lower APR credit cards.