West Virginia Credit Card Debt

According to the 2009 Nielson Report, the average individual in West Virginia is over $10,000 in debt, and much of that debt comes from credit cards. This is not surprising as 78% of American households have credit cards that they use on a regular basis. The use, and over use of credit cards, combined with high interest rates, and low monthly payments has made credit card debt one of the leading forms of debts in the US today. At the end of 2008, Americans' credit card debt reached $972.73 billion.

So what does this mean for the residents of West Virginia who currently suffer the burden of credit card debt? It means the need for an advocate in your corner, it means getting expert advice, and finding ways to control your spending and eliminate your debts. Debt consolidation, and better money management are two ways that WV's population can get out of credit card debt, and reform their financial habits.

Resolving Credit Card Debt

Resolving credit card debt is a simple process, but one that tends to be difficult to achieve. It requires discipline and commitment to reform. The following are three steps to resolving debt and reducing or eliminating your dependence on high interest rate credit cards:

First, set a budget. In order to eliminate credit card debt, one must live within their income. You can make large payments on your credit card, but they will not do any good if you continue to create debt on the card. It can be difficult for families to get out of credit card debt when they constantly exceed their income. The only way to put a stop to credit card debt is to learn to control your expenditures, and reduce and eliminate your debt, while not incurring any further debt. Sacrifices have to be made to get out of debt. Your personal solution to credit card debt is that of forming a budget that allows you to cover all of your fixed monthly expenses, have some fun, and still pay more than the minimum payment on your credit card. Whether you live in WV of Timbuktu, learning to live off less than you earn is the key to financial well-being.

Second, form a repayment plan. A budget is going to help you to control your expenditures and have a clear idea of where you stand financially, however, in addition to managing your money better, you also need to aggressively pay off the credit card debts you have. Credit cards have high interest rates, of 12% to upwards of 25%. This means that it is the most expensive loan on money you are going to find. While it is good to try to pay down other debts, such as cars, education loans, mortgages, etc. Credit card debt is generally the debt that carries the highest interest rates. Thus, it is the money you pay the most to borrow. So, pay less by paying off these debts first. Set up a plan to get your credit cards paid off as quickly as possible while still making your other financial obligations.

Third, save money. Most people do not realize that one of the best things you can do to stay out of credit card debt is save money. Life happens, cars break down, people get sick, tires go flat, etc. If you do not have money set aside for these instances, your efforts to get out of debt will be short-lived. So, while paying down your credit cards, be sure to set some money aside for emergencies. It may take you slightly longer to pay off your existing debts, but it goes a long way to keep you from incurring new debts.

While these are three great tips for helping you get on a better path financially, sometimes you need a little expert advice and extra help. If your finances have spiraled out of control, and your credit card debt situation is over you head, debt consolidation may be the answer for you.

Debt Consolidation

Debt consolidation helps borrowers who are in over their heads financially to correct their ever-worsening debt situation, and make it more manageable. While debt consolidation does not reduce or eliminate any of your debts, it can make them more manageable by reducing the headache of dealing with multiple creditors, and high interest rates and monthly payment amounts.

In its most basic form, debt consolidation has the borrower getting a loan large enough to pay off all their various debt and thus combine multiple payments and interest rates into one, hopefully lower payment and rate.

Another option is to allow a debt consolidation company come in and negotiate lower fees and longer repayment terms with your creditors. This allows the borrower's income to go further, and makes it possible to meet their monthly debt obligation. In some cases a borrower simply does not have the income to meet all of their payments. Thus, the debt consolidation company steps in and helps them come up with a pre-determined amount that they can afford each month. Then, the borrower will then make one payment of that amount, to the debt consolidation company, and they will disburse the money among the various creditors, according to the terms they met with them.

Another option for consolidation of debt has borrowers using their home as collateral to consolidate debt either by refinancing their mortgage or opening up a home equity line of credit, which they use to pay off their creditors.

Benefits of Debt Consolidation

Debt consolidation is a great way to make your debt more affordable, but it should be clear that the overall payment liability calculated over the life of the loan will be higher than it currently is. This means in the long run your debt will cost you more. So, with that in mind, why should you consolidate your debt?

1. It keeps you from spiraling further into debt. Yes, in the long run you pay more for your existing debts, but by making the debts more manageable. It allows you some breathing room, and with time, and the increased ability to manage your money, you should be able to further pay off your loan liability by the savings accrued through reduced monthly repayment installments.
2. Consolidating high interest credit card debt into a lower interest loan allows borrowers to use their money more productively. Instead of paying 21% interest, they may pay 12%, and their savings can be used to make improvements, pay off debts faster, etc.
3. It simplifies things, making the confusing mess of variable interests, creditors, and overwhelming debt seem manageable, making it easier to set and stick to a budget, which means your financial health will improve.

While the average FICO score for residents of West Virginia is above the national average, if your FICO scores are poor, finding a consolidation loan that will not greatly increase your debt liability may be difficult. A consolidation loan is a great option if you carry a lot of credit card debt, as the interest on credit cards is high, and if you can qualify for a consolidation loan, there is a good chance you will get a much lower rate. However most people who need consolidation loans have some dings and dents in their credit due to late or missed payments. So, unless you can get lower rates, it may not be the best option for you, even if your monthly payment amount is reduced.