Credit Solutions - The 12 Steps To Credit Destruction

In this troubled economy it seems like credit card debt is just a normal part of life. You and almost everyone you know probably has at least some credit card debt. While most debt hovers around the thousands, some people have managed to go all out and acquire debt in the tens of thousands (show-offs).

Now if you ask yourself how you go into so much debt you may not know the answer. That is OK. Most people have no idea how they got so deeply in the red. The truth is, there are 12 specific steps that happen before a person is in need of credit card debt consolidation services. After reading this article you will be able to recognize the steps and hopefully avoid the downward spiral before its too late!

Even if you are a responsible person and pay your credit card payment every month you still have something to worry about. If you miss a car payment or an electricity bill you can still be in trouble. If any missed payment hits your credit report it can trigger a interest rate increase on your credit card. This devious little scheme is called universal default.

While 0% APR might sound great, once you miss just a single payment that rate shoots up to 35%. Gravity tells us that what goes up must come down…apparently credit card companies’ didn’t get that memo. Once your rate goes up it stays up.

Your payment can still be late, even if it is made on the due date. How can this happen? Well payments can be due in the morning or afternoon. So even if you make a payment at 2pm on the due date it can still be late.

Some people think they are safe because late fee charges are currently “only” a maximum of $39. However, what people fail to understand is that late fee charges that are percentage based can actually cost several hundred dollars, depending on how big the balance is.

As evidenced by their name, variable rates can change without notice. The shocking thing is that even fixed rates can change when your creditor gives you 15 days notice. Basically, your rates can change at any time and for any reason. I bet you going to sleep really well tonight.

Two cycle billing means that your finance charges will be much higher if you don’t pay your bill in full each and every month. Maybe you should have thought twice about that LCD T.V.

Don’t even think about traveling this summer or else you will be hit with a nasty exchange rate fee. You can count on adding 1-3% on all overseas purchases; this is on top of the baseline 1% exchange rate fee.

If you are thinking about taking out a cash advance then remember that you will be hit with a high APR and also a percentage fee. Any payments that are made apply to the lowest APR first, not the highest APR. You must first pay off the entire balance before paying off the high APR cash advance.

Low minimum payments sound nice on the surface until you realize that the lower the payment is the longer it will take you to pay off your debt. Don’t worry though, those finance charges will keep piling up every month and should keep you company.

If you decide to transfer some of your credit card debt to a new card you should pay close attention. The limit on the new card can actually be changed so that it is lower than the amount of the balance transfer. This means that the first time you use the new card you will be hit with fees.

Once credit card companies see that your credit is in danger you will start to get card offers that have starting fees. So a card with a limit of $300 can have a $96 Program Fee, a $48 annual fee, a $56 Account Setup Fee, and a Monthly Participation Fee of $8. So you new credit card with a $300 limit already has $296 of charges on it. If you charge more than $4 to the card you will be hit with a late fee and might even have your rate increased.

If you think cutting your cards up is the solution then think again. If you do not use your cards then you will be hit with an inactivity fee.

Now that you are in the deepest financial hole of your life you may be looking to consolidate credit card debt now. The problem with most of these companies like Credit Solutions of America and National Credit Solutions is that they usually don’t offer you a credit solution…they just make more problems.

Even if you do decide that a debt management program is the right choice you still need to consider something. The only way to qualify for one of these programs is by missing a payment. It is a classic catch 22.