The Pitfalls of Using Credit to Pay Credit
Posted on 22 nov 2017
debt savings credit card hardship debt mediation debt negotiations debt relief debt solutions
Seeking a debt solution by accumulating more debt is a false economy, without a proper exit strategy all you will be doing is placing a heavier debt burden on your future.
For debt relief solutions, there is a dumb way of using debt and a clever way. A clever debt is using the banks money to invest in an item, business, share, activity that will garner you a long-term benefit. For example, a holiday, property, vehicle, investments of some kind etc. A dumb debt is seeking debt assistance by borrowing money to get you out of trouble without dealing with the source of the problem, spending.
Debt relief through more debt is self-perpetuating, the interest charges could far outweigh the benefit the credit provides. Without a viable exit strategy to help with debt repayment it is not advisable to seek further credit card debt.
Always remember that every time you apply for credit you leave a record on your VEDA credit report. This is of itself not a problem until the enquiry numbers build up and before long the number of bank enquiries will begin to tarnish your credit scoring.
For a debt reduction plan, seek out debt negotiators or debt mediators for assistance. Or, relook at your budget to identify where you can control your spending and channel those savings into your debt to help with the debt balances.
To help with debt repayments find other ways to raise capital by selling unwanted household items, find a second job or downsize accommodation or vehicles.