Should You Stop Paying Credit Card Debt and Stop Worrying About It?

Many consumers who have gotten themselves into a financial bind often ask themselves whether it’s worth continuing forward on the current path. If you are carrying burdensome credit card debt, should you stop paying and stop worrying about it? It’s a legitimate question and one definitely worth asking. The answer is no, it’s never beneficial to keep these types of things out of sight and out of mind, it could end up costing you in the long run and is financially irresponsible. No matter how grim things might seem they can always turn at the drop of a dime.

Benefits of Paying Down Debt

Psychological

Psychologically speaking, it feels great to be able to pay down debt. Finding your way out of a tough hole and a financial bind is a highly commendable thing to do and will have many added psychological benefits. It also reminds you to try and avoid similar situations in the future (if possible) and learn from past mistakes. Besides that, you’ll feel better about yourself and feel glad that you were able to overcome a difficult situation and are free from owing others’ money.

Credit Improvements

Paying down debt will help improve your credit worthiness in the long-term. It will help you to establish positive payment history and lower your utilization rate. Two factors which alone account for 65% of your credit score. The more debt you can pay down the better off you’ll be in terms of credit. The quicker you aggressively pay down your debt, the quicker you’ll see a rebound in your credit.

Savings

Paying off credit card debt could save you a lot of money on interest payments in the long term. Credit cards are known for having high interest rates and depending on the amount of debt your carrying your savings could be quite significant. Moreover, these high interest rates are compounded daily so the sooner you pay down your debt the better off you’ll be.

Drawbacks of Not Paying

Additional Accrual of Interest

Credit card interest rates are pretty bad and for that reason every day that you’re late on a payment without a plan in place or a solution forward you’re losing a lot of money. Over the course of months additional accrual of interest could potentially leads to significant increases in the balance before the account eventually charges off. At the point interest accrual will stop but your credit card balance will have increased significantly.

Potential Litigation

Creditors could potentially sue you and take legal action against you for debts owed. Since you agreed to pay back what you borrowed some creditors could potentially take legal action against you and look to collect on the full debt amount plus potential attorney fees and associated interest costs. They would be in their writes to serve you and summon you to court in for debts owed.

Closure of Open Lines of Credit

There is something called universal default in the credit industry. What this basically implies is that if you stopping paying some of your accounts, like one of your larger balance credit card accounts for example, it could negatively impact your other accounts and lead to their closure. So, if you maintain good payment history on other accounts it might not matter since those accounts go potentially be closed due to universal default.

Exceptions

If you are considering utilizing a debt relief company or even filing for bankruptcy this would be an exception and something that you might want to allow for some careful consideration. Depending on the situation you are in, you should take the time to review some of these alternative solutions and consider some of the potential implications.

Don’t Give Up Hope

If you’re overly burdened by your finances never give up hope! There are always options to eliminate debt and ways to start fresh. It’s important you keep a good head on your shoulders, hold a positive attitude and try your best to keep going forward regardless of how things might currently seem. You’d be surprised how quickly things can turn around!