Credit Card Debt Consolidation And The Middle
Class Trap
By Peter Webber
Credit card debt consolidation is something
many of us will have done at least once or considered doing. The immediate
advantage is to save money on interest rates by moving balances on to a loan
which will charge a fixed rate of interest with fixed repayments.
The wise move to make then is to cut up your cards and then just pay off
the loan. So how many people actually do that? Having a clear credit card
in your wallet is too tempting a thing to have now you are under the illusion
of it being clear. Typically we’ll hang on to it ‘just in case
of emergency’.
Then a few months down the line we find it maxed out again, we’re back
where we were making the loan repayments and card payments with their high
rates of interest again. |
The credit
card debt consolidation cycle can repeat itself a few times before the consumer
realises what they are doing,- by which time their overall debt has plunged
so far into the red that it’s a serious problem.
In the worst cases payments will have been missed or made late so obtaining
loans from established lenders will not be an option leaving debt management,
bankruptcy or bad credit loans as the only options.
This scenario – sometimes referred to as ‘the middle class trap’
is so commonplace that the question arises – “Why do the lenders
allow it to happen?” Recent reports have shown that some lenders are
in fact very actively and aggressively engineering their customers to get
into situations like this.
Credit card debt consolidation is a very profitable line of business, not
only for the high street banks but also for the independent lenders, bad
credit loan companies and debt management companies. |
When someone
has their credit card limit extended, or gets upgraded to a higher grade
of card they feel special. They feel like they’ve been accepted into
an upper echelon now that their ‘financial status’ has been upgraded.
They are made to feel that all of a sudden they can afford to spend more
because they have more credit at their disposal.
All the while the lenders know exactly how much they have to spend, how much
they earn, how much their outgoings are and exactly how far they can be
stretched.
Credit card debt consolidation is best done onto another card with a period
of 0% APR giving you the chance to pay off the premium amount and not interest.
Of course you will have to exercise extreme discipline to avoid the middle
class trap if you are to be successful. The alternatives to forming your
own debt busting plan will only cost you a lot more in the long run and keep
you in debt for longer than you need to be.
The most effective and self serving way to do it is to make your own custom
DIY debt busting plan which does not involve paying fees or interest on top
of your overall debt amount. There are a lot of people out there preying
on those in need of credit card debt consolidation – The DIY method
is really the best way to go. |
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Peter
Webber is the creator of the
100% DIY Credit Card Debt
Busting System – a Free 5 Day Course designed to help you develop
a customised credit card debt busting plan moulded to your financial situation.
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