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Making both ends meet can be challenging these days especially with the economic recession. When payment period comes, you will be bombarded with numerous calls from bill collectors reminding you of your payment. These days, the practice of using credit cards as a debt relief solution has been resorted to by many people in order to relieve them from debt. However, using your plastic to settle your bills is not always an option as you could end up paying more in the long run.
Most of the time, the rate of the interest on you card will be higher than the debt you will settle, especially if it is a previous debt that is no longer earning interest. For some people, settling old debts by lending more money can help boost their FICO scores which can make them qualified to free themselves from the old financial troubles.
However, the problem with using credit cards to pay your old bills is that you subject yourself to more debts as interest adds up to your current bill. You are paying more for your previous balance as well as accumulating new debt. The best thing to do is use revolving credit to pay for necessary purchases as well as to make monthly payments in order to avoid accumulating more interest and debt.
In addition, the best thing to do is use your bank account to settle the debt. If your debt is much higher than what you will accrue at the moment, then this could help you save some money. Rather than pay off the higher monthly interest rate, you could place your entire balance on your bank account and in the process reduce your monthly payments to your creditor.
Settling your debt with your bank account can be a good option but you need to make sure that you will pay your balance on a monthly basis. Likewise, make sure that you would not lapse or default with your payment because you could subject yourself to steep late penalty charges. This is the best way to wisely manage your credit.
A careful assessment of your situation can help you make better decisions compared to settling your balance with your credit card. So as much as possible, avoid paying your bills using your credit card.
There are many credit card companies that provide debt relief solution. It is just a matter of searching for the right one.
