It is a fact that more Americans have debt with credit cards than ever before. The United States' Federal Reserve researched the amount of debt that Americans actually have and found out that together there is more than a trillion dollars worth of credit card debt when added up from all households collectively. They also found that the average family in the United States owes over $8,000 to their credit cards each.
To many financial analysts, this is an extreme epidemic. The amount of credit card debt that most Americans have these days is higher than it has ever been. And there is no reason to believe that this amount isn't going to just keep on going up. Out of the hundreds of millions of citizens that have outstanding credit card debts, many are very tempted to just start ignoring the bills from the creditors. This is because it seems that no matter how much you pay towards the balance, the amount continues to grow. There are some people who believe that it is in your best interest to never pay down your credit card debts.
If you talk to many credit counselors or debt collectors, most will say the same thing about what to do when you are facing a lot of credit card debt. A majority of them will tell you that it is best to face your debt head on. Below are some circumstances that may happen to you when you fail to pay your credit card debts. Also, you will see reasons why you should make paying your credit card debts a top priority for the health of your finances.
Missing credit card payments can be very detrimental to your credit score. When you have an approaching due date on a credit card debt that you know you aren't going to be able to pay, it is best to try and reach out to your creditor before the payment is late. In these situations, time is of the essence. When you contact your creditor to let them know that you won't be able to make your next payment, you should mention a few different things to them.
The first thing you should tell them is that you are going to be missing a payment. Additionally, you should tell them why you won't be able to make the payment and then ask them if there is any way to fix this issue. Also, ask them if there's any way to keep this from showing up on your credit report and keep from having fees and penalties adding up as a result of not making a payment.
When you miss payments on your credit cards and did not inform your creditors, the consequences can start becoming more serious. Once you are 30 days past your payment's due date, it is likely that your creditor will start trying to contact you via email, mail or phone. When this happens, it is essential that you don't just ignore the contact they are trying to make. It's best to respond to their communications so that things do not get worse and more behind on your payments.
Once you start falling two months behind on your credit card payments, the financial consequences are starting to get much worse. At this time the contract with the creditor may get changed. This can include fees, penalties and a raise in your interest rate. You will also start to see a decrease in your credit score each time you hit 60 days late or more.
Once you miss a third payment, it is very likely that your creditor will shut down your account completely and the balance will be due in full. If you do not pay it by a certain due date, most creditors will end up selling your debt to a collection agency. This is the worst case scenario that can happen with your debts because collection agencies will stop at nothing to get their money.
While it can be very scary to fall this behind on your debts, all hope is not going to be lost. Even when you are three months behind on your payments, there are still options you can use to get caught up if you reach out to your creditors in time. It's best to be proactive when it comes to your debts. The sooner you get started on tackling them and getting a plan set in motion, the sooner you will begin getting out of credit card debt.
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