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What to do when your rewards card leads to financial challenges

For some people in Tennessee who have a credit card, it is easy to simply swipe the card when making purchases without necessarily thinking of their credit card balance. Moreover, sometimes using a credit card is the only way they can pay for a large expense, such as a car repair or medical bill. However, unpaid balances combined with interest can add up month-to-month to the point where it can be difficult to make the required monthly payments.

If you find that you simply cannot keep up with your credit card payments, it may help to just stop using the credit card altogether, even if it is a rewards credit card. Rewards credit cards may have more costs associated with them than consumers realize. For example, some cash-back credit cards may have higher Annual Percentage Rates (APR) than other cards. In addition, it is important to weigh your interest rate on your rewards credit card against the actual rewards you receive. If you're paying more in interest than what you're receiving as a reward, it may be time to give up the rewards card.

If you do decide to keep the rewards card, it doesn't hurt to contact the credit card company to see if you can get a lower interest rate. According to one resource, while only one out of five credit card holders take this step, over 75 percent of those who do, have success in lowering their interest rate. In addition, if you give up the rewards credit card, but still simply find you cannot pay the combined total of all your debts, you may want to determine whether filing for bankruptcy is an option for debt relief.

Bankruptcy gives consumers the opportunity to address their debts in a way that gives them a fresh financial start. It can put a stop to harassing phone calls and threats of lawsuits or repossession, which can also relieve a lot of stress on the part of the debtor. Bankruptcy attorneys in Tennessee can help consumers determine if bankruptcy is right for them.

Source: Consumer Reports, "Should You Cancel Your Rewards Credit Card?," Aimee Picchi, Accessed on Oct. 18, 2016

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

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