Credit Card to Pay Off Debt - Is it Recommendable?
Many people are tempted to use their credit cards to pay off debt, especially when bill collectors are calling.
However, that is not always the best way; in fact, you could end up spending more money in the long run.
Let's explore this subject a little deeper so it will be easier to figure out whether or not it is recommendable to use a credit card to pay off debt.
In most situations, the interest rate on your card will be higher than the debt you are trying to pay off, especially if it is old debt that is no longer accumulating interest.
Some people think it is wise to pay off old debt by borrowing more money because they are trying to improve their FICO scores and so they will use any means available to rid themselves of old financial obligations.
The problem, however, is that while you're using your credit card to pay off old bills, you are accumulating more debt in the way of interest being added to your current bill.
That means you are paying even more for the old debt and you are also accumulating new debt.
It would be better to use revolving credit only for those purchases that are necessary and that you can pay off each month so as not to accumulate more debt and more interest.
There are times, however when it may be recommendable to use your bank card to pay off debt.
If you are faced with a debt that has a higher interest rate than you will accrue now then you may actually save money by paying this way.
Instead of chipping away at the higher interest payment each month, you could put the entire balance on your card and then make the lower payment each month to the company extending the credit.
The above strategy may be a good strategy to use as long as you can make the credit card payments each month.
One thing you don't want to do is lapse or be late because most companies impose steep late fees as well as steep over the limit fees.
In order to manage your credit wisely, you want to make sure you are never late making a payment and that you do not go over the limit.
By carefully assessing your unique situation you can make an informed decision as to when it is a good idea to use your credit cards to pay off debt.
It is never recommendable to incur more debt than you can afford to pay and that includes credit cards.
However, that is not always the best way; in fact, you could end up spending more money in the long run.
Let's explore this subject a little deeper so it will be easier to figure out whether or not it is recommendable to use a credit card to pay off debt.
In most situations, the interest rate on your card will be higher than the debt you are trying to pay off, especially if it is old debt that is no longer accumulating interest.
Some people think it is wise to pay off old debt by borrowing more money because they are trying to improve their FICO scores and so they will use any means available to rid themselves of old financial obligations.
The problem, however, is that while you're using your credit card to pay off old bills, you are accumulating more debt in the way of interest being added to your current bill.
That means you are paying even more for the old debt and you are also accumulating new debt.
It would be better to use revolving credit only for those purchases that are necessary and that you can pay off each month so as not to accumulate more debt and more interest.
There are times, however when it may be recommendable to use your bank card to pay off debt.
If you are faced with a debt that has a higher interest rate than you will accrue now then you may actually save money by paying this way.
Instead of chipping away at the higher interest payment each month, you could put the entire balance on your card and then make the lower payment each month to the company extending the credit.
The above strategy may be a good strategy to use as long as you can make the credit card payments each month.
One thing you don't want to do is lapse or be late because most companies impose steep late fees as well as steep over the limit fees.
In order to manage your credit wisely, you want to make sure you are never late making a payment and that you do not go over the limit.
By carefully assessing your unique situation you can make an informed decision as to when it is a good idea to use your credit cards to pay off debt.
It is never recommendable to incur more debt than you can afford to pay and that includes credit cards.
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