Debt Horror Stories You Don't Want to Come True For You
Even though people often focus on how bad debt can be, having debt isn’t necessarily a bad thing. For example, taking out student loans to attend medical school or using a mortgage loan to buy a house are both solid investments in your future. Where debt gets scary is when mistakes are made that result in high interest charges, pesky fees, and damaged credit scores.
Keep reading to learn about three super scary debt horror stories that you don’t want to come true for you.
Working with the “Friendly” Debt Settlement Company
While Casper the friendly ghost did end up being pretty friendly, debt settlement companies usually aren’t as friendly as they seem. If you have a lot of debt that you’re struggling to pay off as fast as you’d like, then you may be wondering if working with a debt settlement company can help you make progress faster.
While debt settlement companies often claim that they can help you settle or renegotiate your debt so you end up paying less than the full amount you owe, working with them is generally risky. Often debt settlement companies charge steep fees and there’s no guarantee they can help you settle your debt. On top of that, they’re known for issuing bad advice like to stop making your minimum payments while they try to settle your debt. This is a move that can cause you a lot of trouble down the road.
Letting the 0% APR Introductory Offer Deadline Sneak Up on You
Credit cards come with notoriously high interest rates which is why credit card debt can grow so quickly. If you have multiple sources of credit card debt, consolidating that debt onto one balance transfer card is a great way to streamline your debt repayment process and to possibly save money. Many of these cards have a 0% APR introductory offer, which means there is a temporary period where you don’t have to pay any interest at all. This can help you save a lot of money and make it easier to pay off your credit card debt faster.
The mistake a lot of people make here is letting the end of the introductory period sneak up on them, without paying off their balance in full. What this results in is going back to having a high interest rate—one that may be even higher than the rate you had before.
The trick to avoiding this scary ending is making sure you have a plan for paying off your balance in full before that introductory period ends before you even apply for a balance transfer card.
Closing Creepy Credit Cards
Speaking of credit card debt, it’s easy to see why you might want to close all of your credit cards while you work towards paying off your debt. It is a good idea to stop using those cards so you don’t continue to grow your balance (or to only make purchases you can afford to pay off in full each month), but closing them completely can hurt your credit score. When you close a credit card, you can lower your length of credit history which can make your credit score drop. If you can use the card responsibly moving forward, it can be worthwhile to keep it open to help maintain a longer credit history.
If you want to avoid staring in your own debt horror story, connect with us and we can help you get a plan in place for paying off existing debt and avoiding taking on unnecessary debt in the future.