3 Ways on How Not to Pay Off Your Credit Card Debt

Most of us have found ourselves in a situation where we have to pay off credit card debt. Not a good place to be at all, considering how daunting it might be especially if you don’t boast of a sizeable income.

Given the situation, it’s easy to make mistakes that affect your financial future. So, here are 3 ways on how not to pay off your credit card debt:

#1: Using Retirement savings

There are two ways by which people usually commit this mistake. Either by getting a 401K loan or by withdrawing money from an individual retirement account. Both of these ways will cause you to lose the compound interest that you might be gaining instead. But that’s not the only problem – you’ll reduce the amount of principal while also creating a ‘taxable event’ that would mean more loss.

#2: Taking a Payday Loan

Payday loans are those loans that are offered as an advance for your paycheck. But there’s a catch. They come with very high interest rates. Sadly, after paying off the fees and interest for such a loan, you’d pay back much more than you would have with your monthly income.

Instead, make adjustments to your paycheck so as to obtain more disposable income in order to pay off these bills. One way to do this is to increase your take-home pay by increasing your allowances for a short period.

#3: Borrow money from family

While some relatives are far better to borrow from than moneylenders, it can make things very awkward if you aren’t able to pay it back on time. A better option, in the first place, is to save for heavy spending during the holidays.