Risky Strategies for Repaying Credit Card Debt

A credit card is a fair-weather friend. It feels great when you have available credit, and you can swipe the plastic whenever you feel like it, and then pay only a small fraction of your balance at the end of the billing cycle. Although the process is gradual, if your financial situation and your spending habits continue in this manner, then before long, your card will be maxed out, and even though you are in no position to think about how much it will cost to pay it down to zero, even making minimum payments is a source of stress. You are making payments, not so that you can have available credit to make more purchases, but just so that you can keep treading water. There comes a point when the minimum payments on your maxed out credit card are so high that you can barely afford to pay them. If you are destitute, you might file for bankruptcy, but filing for bankruptcy is a measure of last resort; people only do it when they have no other options. You will keep paying, if you possibly can, while you hold onto hope that your financial situation will eventually improve. Of course, some sources of funding for paying your credit card bills are more conducive to your long-term financial wellbeing than others. If you are thinking of eroding your sources of financial stability to keep up with the minimum payments on your credit cards, contact a Boca Raton debt lawyer.

Home Equity Lines of Credit

You can’t get a home equity line of credit (HELOC) unless you own a home. By itself, a HELOC is not an especially risky financial product; it is easier to stay out of trouble by borrowing a loan if you had to jump through a lot of hoops to qualify for it, and only homeowners can get a HELOC. There is no harm in using your HELOC to make home improvements or pay college tuition instead of taking out a student loan, but using your HELOC to pay credit card debt is risky, because whenever you rack up debt on your HELOC, you are losing home equity.

Taking Early Withdrawals From Your Retirement Accounts

Likewise, if you have an employer-provided retirement account, you are one of the lucky few. You might think that taking money from your retirement account is the best option for paying your credit card debt, since you are using your own money instead of borrowing it from someone else. Reducing your retirement savings is not the only problem with withdrawing money from your retirement account to pay your bills, though. Every withdrawal you take from your retirement account costs you a ten percent penalty, and you will have to pay a hefty tax bill on the withdrawal, both now and when you retire.

Work With a Debt Lawyer About Paying Down Your Credit Card Debt

A South Florida debt lawyer can help you if you are already thinking outside the box about making payments on your credit card debt.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.

Source:

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