Getting into debt is easy, but digging yourself out is hard. Unless you’ve just come into a large sum of cash, repaying your debts is a tedious process. Be that as it may, most people want nothing more than to fulfill their obligations and alleviate the stress that comes with too much debt. Fortunately, financial institutions like Patriot Funding understands this and want to help consumers overcome some of their debt repayment woes. Let’s take a closer look at some of the most common obstacles.
High-Interest Rates
One of the most significant issues with repaying debt is the high-interest rates. A consumer that charges $1,000 in purchases to their credit card with a 25% APR (annual percentage rate) owes the credit card company $1,250. If the consumer cannot repay this in a year, the interest rate continues to add up until the balance is paid off. Of course, if the consumer charges anything else to the credit card, this will also increase the amount due.
Sure, credit card companies offer minimum amounts customers can pay to avoid a late fee or penalty, but it barely scratches the surface. The minimum rate covers the interest at best. The principal balance remains untouched, and the interest starts accumulating with each passing month. This type of repayment method starts to feel discouraging to consumers who just want to get out of debt.
Penalties for Late Payments
Most cardholders are aware of due dates. Unfortunately, those due dates aren’t always conducive to their finances or pay schedule. Not to mention, consumers on tight budgets fall behind when an unforeseen circumstance compromises their pay. Although some credit card companies will work with customers to find a suitable due date, this isn’t always the case. So, they incur a fee which can be as much as $36. This fee gets added to the total amount due, and interest is charged on these fees, causing their outstanding balance to spiral out of control.
Adding insult to injury, these late payments are reported to the three credit bureaus, which lowers the accountholder’s credit score.
Multiple Accounts
The average American has more than one credit card. If each of those credit cards has a high balance and interest rates, but the cardholder only pays the minimum or missing a payment, keeping these accounts in good standing becomes nearly impossible. The consumer is then left to juggle multiple debts on a limited budget. More credit card accounts with high balances quickly become more than they can bear. Some cardholders stop making payments altogether because they feel like it doesn’t put a dent in what they owe. This pattern of thinking then gives way to a ruined financial record.
Debt Consolidation Services
Patriot Funding provides debt consolidation services. Eligible clients receive a loan that consolidates all their unsecured credit cards, ultimately overcoming the common obstacles listed above. Debt consolidation loans are offered at lower rates than most credit cards, saving consumers a lot of money. Because the interest rates are lower, more of the monthly payment is applied to the principal balance, allowing Patriot Funding clients to pay their accounts off faster.
Debt consolidation loans also eliminates the frustrations of managing multiple accounts with one conveniently monthly payment. Budgeting for one debt payment is a lot easier, which reduces the chances of late fees and associated penalties. Lastly, making timely payments on a consolidation loan improves their credit rating over time.
When applying for and using credit cards, most account holders aren’t planning to accumulate so much debt that they fall into a vicious cycle. From lack of financial education to unforeseen circumstances that alter their finances, several factors play a role in how people get in trouble with debt. Even as they try to redeem themselves, obstacles like high-interest rates, penalties, and managing multiple accounts create barriers that can be difficult to overcome. Fortunately, Patriot Funding offers comprehensive solutions that eliminate these obstacles, enabling clients to become debt-free.
