Escape the High Interest Debt Trap

It may sound obvious. Avoiding high interest debt should be a given in anyone’s financial checklist. Sometimes avoiding those outrageous rates is not as simple as you would think. Most lenders would prefer not to make it too obvious that an advertised rate is just an “introductory offer” or that those “don’t pay until the next decade” deals could end up costing you more than what that new leather love seat is actually worth.

Falling into these kinds of traps is one reason why many people stumble into financial difficulty. Often the convenience of “buy now, pay later” turns into a nightmare for the customers. They are struggling to pay off even the minimum balance. It is something that happens slowly – over time – which is why it is so dangerous.

How can I spot the trap of high interest loans?

High interest loans are usually not obvious. One exception to this, of course, is predatory lenders who specifically target people who have recently gone through insolvency. Since their credit is poor, these lenders can get away with 18%, 25% and sometimes even higher rates of interest.

While some might wonder how people could get themselves into such a predicament, it becomes more understandable when you are working with an individual who needs a vehicle to get back and forth to work but cannot find an ethical lender to provide them with a car loan. This is just one of many illustrations showing why it is beneficial to work with a trustee who can help you with your budgeting and spending even after you’ve gone through the process of insolvency.

Of course, there are other ways in which lenders are able to add additional charges.

Some credit cards, for example, may have annual fees. While the monthly interest rate may be low, the total amount you end up paying on your card could be higher than you anticipate.

Late fees are another thing to watch out for. Remember those “don’t pay for a decade” deals? Well, the minute that time frame is over, you can expect to pay some pretty hefty late fees on that leather love seat if it isn’t completely paid off. In fact, in many cases you may have to pay interest starting from the day that you bought the love seat – last decade!

And then there is what is perhaps the worst offender – payday loans. While these loans can seem like a convenient way to help you make it into the next week, the fees and the interest can be enormously high. In most cases, you will be better living on beans and rice for the rest of the week than getting into a cycle that can be difficult to escape.

Eliminate the high interest debt you have!

So what if you are already carrying high interest loans? Is there any way out? It takes work, but it IS possible. Start with a debt repayment plan. Make sure you start with the highest interest loans and pay more than the minimum.

Rebalance your monthly budget to include your debt repayments and last but not least, stay away from further high interest traps!

For more help eliminating debt, contact Goldhar & Associates at 1-855-541-5114 or dial #debt on your cell phone, or download our free e-book.