Client Resource Center

Practical answers for your questions

Phone: 925-472-0990 • Fax: 925-472-0991

Credit card debt may be hazardous to your financial health
Credit card debt

Have you been offered a credit card lately? The industry sends out billions of credit card offers each year, and the average household has several thousand dollars in credit card debt. Credit card companies make it very easy and very tempting to say "charge it."

Unfortunately, like so many tempting things, credit card debt can be bad for your financial health. It is one of the most expensive ways to borrow money, and big balances on your credit report can hurt when you apply for a home loan or a car loan. Also, in today's uncertain economy, the last thing you need is high-interest debt that can jeopardize your ability to keep up with payments.

That is why one of your smartest financial moves might be to start paying down your credit card debt. Some people do this by taking out a home equity loan; others try debt consolidation. Neither of these strategies is without risk. You might want to talk to a reputable nonprofit debt counseling service before you adopt a plan. You can receive impartial advice on your financial strategy and useful practical tips too.

One way to get a handle on your debt is to list the outstanding balance and the interest rate on each of your cards. Then make the largest monthly payment you can afford on the card with the highest interest, while keeping up the minimum payments on all your other cards. Once you have paid off the first card, don't use it again. Repeat the process for the card with the next highest interest rate, etc. In the meantime, don’t hesitate to call your credit card companies and try to negotiate lower interest rates.

Paying off your credit cards will take time and will likely require a change in your spending habits. But the effect on your financial health will be well worth the effort.