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When You Find Yourself Living Off Your Credit Cards

If you reach the point where you are living off your credit cards, it’s time to seriously think about reevaluating your financial situation. Credit cards are not necessarily a bad thing to have. In fact, many people are able to build or rebuild credit by using cards. However, credit cards are short term loan instruments and are not intended to address long term debt problems. 

Living off your credit cards is not a replacement for earnings. It may feel like a working solution at the time but you are simply adding fuel to the proverbial fire that is your debt. The sooner you take action to address the original debt problem, the better. 

Credit Access

The first problem with living off your credit cards is that it provides neither an infinite nor unchangeable credit line. The credit card company may decide to scale back your ability to charge in line with agreed terms. Or, as has been happening, one or more of your credit card providers could decide to reduce how much you can charge as a change in policy. Using credit cards as if they are income may leave you in serious financial difficulty when your credit line is cut off. 

Monthly Payments

If you are living off your credit cards there is a good chance you don’t expect to have the income to meet monthly payments. One way to meet those payment obligations is taking out another card. However, this is ill advised because eventually you will have maxed out both cards and end up with a huge amount of credit card debt you cannot pay. This type of activity does not go unnoticed by creditors, either. Before long the debtor will see a reduction in available credit in the vast majority of cases. 

Credit Card Interest Compounds

Another issue is that credit card interest compounds. This means while you are living off your credit cards, your interest in being calculated on any accumulated interest. If you are only maintaining minimum payments each month, your credit card debt will balloon out of control based on the amount owed in interest alone. If you get behind in payments on credit cards, you may be charged a much higher default interest rate as well. This is not an ideal scenario for anyone who thought they could use living off credit cards as a means of addressing other debts. 

Chapter 7 Bankruptcy

If you have been living off credit cards because of existing debt, Chapter 7 bankruptcy may be a suitable option or a different bankruptcy chapter may be a better fit for you. It is important to discuss your financial situation with an experienced bankruptcy lawyer before things get out of control. H. Lehman Franklin P.C. can provide invaluable advice to help you make the right decisions when facing overwhelming debt problems. Call our offices in Georgia today if you have been living off credit cards and need a suitable solution. You can reach H. Lehman Franklin P.C. on 912-764-9616 or via email at info@hlfranklin.com. A member of our team will discuss your finances with you and provide expert guidance.