New Statements Could Encourage Chicago Credit Card Holders to Lower Debt with Bankruptcy
If you become alarmed when opening your next credit card statement, it might actually be a good thing.
Now that the Credit CARD Act of 2009 is in full effect, creditors in Chicago and beyond are required to include a lot more information on your bills. That includes not just the interest rate, but the amount of time it will take you to pay off your debt if you pay the minimum balance - and the total cost.
A word of advice: you may want to be sitting down when you take a look at the numbers. Since most of us are in the routine of making monthly payments, we rarely take the time to calculate just how much we'll end up paying. By withholding that information, creditors keep us from thinking about it - and that keeps us spending. But seeing it in print can be a shock. And it might be just the shock we need to snap to our senses and start paying down debt or learning about our options - like bankruptcy.
Most Americans make just the minimum payment on their credit card bills. In the short run, paying less makes it feel like we're saving money. But quite the contrary. Meeting the minimum usually means you're paying not much more than the interest your creditor charges. Without paying down any of your original balance, you'll have to keep paying the minimum payment - for years, decades, theoretically forever.
The more you pay above your APR, the faster you'll be free from debt - and those monthly payments.
At first, facing reality will probably be overwhelming - who wants to see that they might be paying off this year's groceries, birthday presents and socks for the next 33 years? But you can turn that initial shock into motivation. Think about it - if creditors didn't have to lay out the truth, the debt would still be there, hanging over your head. Except that being kept in the dark means you wouldn't have the opportunity to react. Now you do. Don't look at those numbers as your fate. Look at them as a wake-up call. This is your chance to prevent that unhappy future.
But what if facing your debt forecast makes you overwhelmed to the point of apathy - or depression? Take heart - there are ways to make paying down debt less painful. Bankruptcy, for instance, can make eliminating debt more manageable by offering an individualized payment plan - or in some cases, a way to completely discharge debt.
Learn more about how bankruptcy can put you on the fast track to financial freedom with a free personal debt analysis courtesy of a Chicago bankruptcy attorney.