Credit card debt affects people from all walks of life. A recent report from Fox News revealed that the average American consumer has over $5,000 in credit card debt.
Many people end up doing more harm than good when attempting to get their finances back on track due to the litany of myths that persist around debt. To have a more secure financial future, you need to ignore the following common pieces of advice and correct anyone who tells them to you.
Myth #1: It is acceptable to only make minimum payments on a credit card
If you only make minimum payments, then you will never get out of credit card debt. You should try to pay more than that each month. Many schedule the minimum payment twice every month, so less interest accumulates. Before you have any debt, you should try to pay off your credit card in full every month. Maintaining a balance on your card will not help you in any way.
Myth #2: You can fix your credit with a “credit repair” company
Plenty of companies look to make a quick buck. They guarantee they can manage your credit card debt and improve your credit score. It can take many years to increase the rating sufficiently. No shortcuts exist, so anyone offering anything otherwise is a con artist.
Myth #3: Bankruptcy destroys your financial future
Bankruptcy is a final resort for people who have tried everything to get out of debt to no avail. A lot of people are hesitant because they assume that once they file for bankruptcy, they will never receive approval for a loan ever again. This is not true. Your credit score will take a significant hit after filing for bankruptcy. However, you can immediately take steps to improve your score after discharging your debt. Bankruptcy is not the end, it is only the beginning.