Credit Card Debt in Maryland

Millions of people are a slave to their credit card debt, and many times it is due to no fault of their own. Yes, it is possible self-discipline has been cast to the wind, but in this day and age, that is most likely not the cause of increased credit card debt.  The recent recession has caused significant job loss for every state across the country, and Maryland has not escaped.

If you live in Maryland, you are faced with an unemployment rate of 7.4%.  Fortunately, for residents in this state, this rate is much lower than others have had to live with.  Some states in the south have hit unemployment rates as high as 11.5%.  This is a devastating number, and has contributed to the increase in credit card debt.

Credit card debt is so easy to get trapped into. Due to the ease of use and in times when you have no other source of income, what else can you do but charge the essentials you need to survive?  Unfortunately, for millions of people this has been the only alternative they have.

So, once credit card debt has peaked to an all time high, many people are looking for ways to allow them to reduce it.  What are the options, many people in this situation are asking themselves.

One of the most common ways to help remedy this problem is to use debt consolidation. This simply means you combine two or more loans into one and try to get a lower interest rate.  There are many benefits to this and it certainly something anyone that has huge debts should certainly consider.

Listed below are some serious questions you may want to ask yourself prior to getting a debt consolidation loan:

• How much debt do I have?  If you have less than $5000 in credit card debt, it may not be worth your time to use debt consolidation to assist you.
• How many creditors do I owe?  If you owe more than two, you will want to certainly give this option some consideration.  For instance, many people owe as many as five different creditors, so it is to their advantage to get a debt consolidation loan.
• What is the current interest rate I am paying?  If you have several loans, add up the interest rates and divide this number by the number of loans you have.  This will give you an average of the interest rate you are paying. 
• What interest rate will I get with a debt consolidation loan?  Do your research. If you don't get a low enough interest rate, it may not be worth all the time and effort it will take to get this loan.  You also have to factor in the fees that are associated with this loan to get a true figure.

So, there are many things you will want to consider when it comes to whether or not you should choose the debt consolidation option.  It may be to your advantage or it may not.  The answer will certainly be the amount of interest rate you are able to secure.

Another factor that will have a huge impact on the interest rate you receive on any loan you secure is your credit score.  Did you know the average credit score in Baltimore, Cumberland, Aberdeen, and Ocean City, Maryland is 664?  This is not a bad credit score, but it is not good enough to help you secure a lower interest rate. Many people aren't aware that you must have a credit score of at least 720 to get the best possible interest rate. 

It is possible to increase your credit score, but it will take time.  Although, increasing your credit score may not help you right away, it can over time.  There are many ways you can increase your credit score with one of the best being to simply pay your bills on time. This will help guarantee you have the best credit score rating possible.

If you are in severe credit card debt, you may want to consider a debt settlement with your creditors.  This is when you come to some type of agreement with your credit card company, regarding the amount you can pay back.  Many creditors have reduced the amount that must be paid back as much as 40-60%.  This can really benefit anyone that has debt they have no way of paying back in a timely manner.

So, why would a credit card company agree to a debt settlement? It does seem too good to be true, but it happens every day. The reason that credit card companies agree to getting paid much less than they are owed is because this may be the only way they get any of their money back. 

If someone is in serious debt and considering filing bankruptcy, the credit card company will not see any of the money that is owed to them.  This is the reason they will agree to taking back less than they are owed.  So, if you are in such a dire situation that you think you may have to file bankruptcy, you should let your creditors know this is an attempt to reduce some of your debt. 

However, there is a high cost for getting a debt settlement.  It does not come free. In addition to paying some steep fees, it will cost you more in other areas.  This option can really hit your credit score hard.  This is something you should consider prior to actually doing.

It is far better for anyone that is in a lot of debt to try and get a debt settlement rather than to file bankruptcy.  Bankruptcy is only when there is nothing else you can do to get out of your financial situation.
In order to help you avoid getting into a situation that may require filing for bankruptcy, you may want to consider some of the tips listed below to help you avoid huge credit card debt:

• Pay cash as often as possible.  People can easily get into a habit and it is great for anyone to get into the habit of paying with cash.  This will make using a credit card an exception rather than the rule. Put this tip to the test, and you may soon realize that it is much easier to do than you thought.
• Use a zero interest credit card and pay off the balance each and every month. This is a great way to use a credit card when you must, as long as you pay off the balance, this is the most important thing to remember.
• If you can't pay cash for it, don't buy it.  There are many things we purchase that we could certainly do without, and when you practice that self-discipline, it will show in your credit card balance.
• Make a budget and stick to it.  If you make a budget, it not only allows you to plan where your money is going, but also lets you know where it is going.  By keeping a budget, it can significantly reduce your credit card debt and this is the ultimate goal for millions of people.