When Texas consumers use their credit cards in a responsible manner, there may be several advantages. However, there could be many disadvantages if they are used without planning ahead for how to manage them. One late credit card payment can trigger a host of penalties, including late fees, higher interest rates and lower credit scores. The paths leading to credit card debt that is out of control are varied, but once consumers are unable to pay even the minimum amount due on their credit cards, they may find it difficult to remedy the situation.
When consumers are unable to pay the minimum amount on their credit cards for 60 days, the credit card company may impose a penalty interest rate on the full balance. With interest rates of up to 30 percent in some penalty cases, credit card holders may wonder what they need to do to get back to the normal interest rate again. Credit card companies usually review the card holder’s status after a period of six months.
If the consumer is able to pay no less than the minimum amount — and preferably more — for six consecutive months, and those payments are not returned, the credit card company may reduce the interest rate again. It is important to understand that the higher rate will be effective during the six-month revision time, and will only be revised after the end of that period. Card holders who have successfully gone through this time are usually advised to make every effort to continue making timely payments on the credit card, in order to rebuild a better credit score.
Consumers in Texas who have once been able to keep up their monthly payments, but have reached a stage where their credit card debt has become overwhelming, may desire to gain knowledge of the legal solutions to their financial problem. A wise choice to consider may be the protection of Chapter 7 bankruptcy, which is a perfectly valid way to resolve overwhelming debt. Chapter 7 may offer the opportunity to have all credit card debt discharged. However, there is also the option of Chapter 13 bankruptcy, whereby consumers who have a monthly income could negotiate a reorganized payment plan over an extended period.
Source: finance.yahoo.com, “Am I Stuck With a Penalty APR on My Credit Card?“, Jason Steele, March 27, 2014