Solve Mounting Credit Card Debt
with Informal Debt Agreement
Overwhelmed by high-interest credit cards?
Struggling with making minimum payments or constantly pouring your salary into credit cards only to max them out again?
Are you struggling with credit card debt? You’re not alone. Many Australians, especially those over 40, have found themselves in this position due to a period of “over-lending” before the Banking Royal Commission cracked down on lending practices. Banks used to offer credit increases as rewards without proper due diligence, leaving many with maxed-out cards they now struggle to manage. Although the credit cards are in your name, your financial situation may not be solely a result of your actions. Extenuating circumstances, such as banks previously extending more credit than you could manage, may have also played a significant role.
Why Reconsidering Getting a Debt Consolidation Loan Might Be A Good Idea?
While many see a debt consolidation loan as a solution, tighter lending criteria post-Royal Commission and rising living costs mean many are not eligible with major banks. Instead, they often end up credit hunting, potentially only qualifying with non-traditional lenders who offer loans at higher interest rates, which can quickly transform a seemingly good idea into a financial strain with less favorable payment terms. Additionally, credit hunting affects your credit file, as every application, whether successful or unsuccessful, remains on your file for five years, reducing your overall credit score and your ability to get credit for years to come.
While many consider debt consolidation, there’s a lesser-known but more effective alternative that can truly interrupt the debt cycle without worsening your financial position. Informal debt agreements provide a personalised approach that can significantly ease your financial burden.
Common Credit Card Debt Traps:
- Multiple high-limit cards from past “over-lending” practices
- Using credit cards for emergencies due to cost of living increases
- Falling into the “interest-free period” trap, leading to high-interest charges
- Misconceptions about joint credit card responsibility in relationships
- Paying only minimum amounts leading to years of debt and accumulating disproportionately high interest.
The True Cost of Credit Card Debt:
- Many credit cards charge exorbitant interest rates, averaging 20% but can go as high 49%.
- Making only minimum payments can trap you in debt for years. For example:
- On a $5,000 balance at 24.99%, making only minimum payments:
- It would take over 43 years to pay off the debt
- You’d pay more than $21,886 in interest alone
- On a $20,000 balance at 20.00%:
- It would take nearly 84 years to pay off
- You’d pay over $96,168 in interest
- On a $5,000 balance at 24.99%, making only minimum payments:
If you want to calculate how much interest you’re paying on your credit card loan, click on this link to use the calculator: https://moneysmart.gov.au/credit-cards/credit-card-calculator.
Did You Know?
Look at the bottom of your credit card statement. It shows how long it will take to pay off your balance and how much interest you’ll pay if you only make minimum payments. The numbers can be shocking!
Our Solution
At Debt Angel Solutions, we specialise in informal debt agreements that provide a tailored solution for your credit card debt. We understand the habits and challenges associated with credit card use, including:
- Breaking the cycle of reliance on credit cards
- Managing subscriptions and recurring payments
- Transforming financial habits while addressing debt
We work with you to:
- Potentially stop or reduce interest charges
- Freeze payments temporarily if needed
- Redirect payments to more manageable accounts
- Assess necessary vs. unnecessary spending and expenses
- Develop a strategy to clear your credit card debt as quickly as possible
Key Benefits of Informal Debt Agreements
- Lower Monthly Payments: Negotiate terms directly with your creditors
- Interest Rate Freeze: Secure long-term freezing of your interest rates
- Debt Reduction: Work towards reducing the total amount you owe
Why Choose Informal Debt Agreements Over Traditional Debt Consolidation:
- No new loan required – we work with your existing creditors
- Potential for actual debt reduction, not just payment restructuring
- Tailored solutions that address your specific situation and habits
- Support in breaking the cycle of credit card dependence
Types of Loans We Handle:
- Buy Now Pay Later Loans: Manageable plans to pay off your purchases
- ATO (Australian Tax Office) Debts: Solutions for managing and reducing tax-related debts
- Flexi Loans: Tailored repayment options to suit your financial needs
Don't let credit card debt dictate your future.
What steps will you take to transform your situation?
If you're caught in the debt cycle, remember: if nothing changes, nothing will change. Will you stay on this path indefinitely, or will you choose a new direction? Reach out to us today for a free debt relief consult call and discover how informal debt agreements can pave a more promising path to your financial freedom.
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