Chicago Credit Card Debt Piles Up, So Should You Get Another Card?
Remember when getting a credit card was thrilling and it made you feel like you were getting some new-found freedoms?
Well, now that you're an adult and have seen the destruction these high interest rate cards can cause, you probably don't feel the same way as you did years ago. With the Great Recession mostly behind us, credit card companies are again opening up shop, sending out offers and paying high-profile celebrities to peddle their product.
But should you take the bait? Credit card debt is one of the No. 1 factors for filing bankruptcy in Chicago. They are responsible for people piling up debt that seems never-ending because of high interest rates and hidden fees that ensnare consumers. But there is help and consulting with a Chicago Bankruptcy Lawyer is a good first step.
Data shows that new lines of credit were opened at a 60 percent increase for people with scores below 620 in the first quarter of 2011 compared to 2010, Equifax reports. Banks and credit cards are opening up new lines of credit like they did before the economy crashed, but is that good for you?
The article looks at some tips of how to determine whether or not to jump back into the credit card fray:
- Obtain a credit report so you know what your situation is: Before applying for or accepting credit card offers, see what your score is and repair any errors that may be contained in it. Mistakes can lead to higher interest rates.
- Ask yourself why this is a good idea: Credit cards should be used to show lenders you can handle your card responsibly and repair your credit score. They shouldn't be used for emergencies. A cash fund should be used for that.
- "Preapproved" really just means "prescreened": Preapproval to most companies just is an initial look-see. When you apply, they dig deeper and usually offer higher rates.
- Don't be swayed by the envelope: Flashy signs of free gift cards and perks just for signing up sound great, but read the contract thoroughly. There may be hidden clauses that may make it not worthwhile.
- Be wary of secured credit cards: These work by putting down a deposit and the available credit is based off that. But there can be upfront fees and even charges for customer service.
- Shop around: If one credit card company wants you, others probably do, too. But get the best possible interest rate if you're committed to getting back in the game. Don't be afraid to say no.
- Prepare for the hard sell: Companies will offer services, such as ID theft protection or credit monitoring for "pennies a day," but they may not be worthwhile. You may already have offered protections through insurance policies.
- Consult a non-profit credit counselor: For-profit groups can be a rip-off, but a non-profit group may be able to give you advice about how to handle your debt.
If you need to speak to a Chicago bankruptcy attorney call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 today for a free debt analysis. Call 800-440-7235.
More Blog Entries:
10 Ways to Avoid Credit Card Debt in Chicago: May 30, 2011
Additional Resources:
Eight Things to Consider Before Diving Back in to Credit Cards, by Marcia Frellick, Fox Business