The great majority of people that have debt problems state that the credit cards are their main problem and it is because of the easy nature of using the card to buy impulsively. The banks and lending institutions will often push people into getting higher credit limits once the previous limit has almost been reached. So in a lot of cases people have been enticed to spend more on their credit card even though they are showing the first signs of experiencing a repayment problem.

If you allow yourself to go into default you are really in trouble because your credit score will be reduced and future loans for anything else may be denied or be granted to you at a higher interest rate. I cannot stress this enough “Do not go into default on a credit card or a personal loan” you will destroy your credit score and it may be years before it can be repaired. As soon as you realise that you are in financial trouble and will be unable to meet a payment you should go and see your financial institution and tell them about your difficulties and make arrangements with them for you to alter the terms of your repayments. Every single case is going to be different but in the first instance look to your credit supplier to offer you a solution. If what they propose is not a workable solution for you then tell them and put forward what you think would be a workable situation.

In some extreme cases you may be required to surrender your card but this will only happen if they decide that you could not sustain any further debt without going bankrupt. I have seen cases where there has been an interest rate reduction from 18% to 6% for twelve months and other cases where the minimum repayment amount has been reduced from over $1,000 to $200 for six months. The lenders are willing to change the details to suit the case presented to them because they want you to recover from this temporary setback and continue to be a long term customer. You on the other hand should heed the warning and decide that you are going to get control of your life and your finances.

If you have your own home and have some equity in your home one solution would be to get all your debts included into your mortgage to take advantage of the lowest interest rate that you possibly can. It would be wise then to destroy all your credit cards and operate without the use of them while you pay as much as you can off your mortgage.

Another solution would be to utilise a Debt Consolidation Loan and include all your credit card debts, store card debts and personal loans into the one account. The combined repayments should be considerably lower than the total of the individual payments because the interest rate would be less than the credit card interest. Once again cut up your credit cards and don’t be suckered into getting credit cards again. You can eliminate your debts completely within two or three years and start living your dream of being financially secure and living a stress free life.