This is an article by Cindy Hawthorne. She works for a prominent private lending institution. She always advises customers to refer to debt settlement reviews for making the right choices.

    It can indeed be extremely frustrating that despite you regularly making your credit card and other debt monthly payments, the total outstanding does not seem to be winding down significantly. Some of the top reasons why getting out of debt is so vexing:

    Payments Only Cover the Due Interest

    When you take a loan or charge your credit card but do not pay in full on the due date, the monthly payment due comprises both principal and accrued interest. If your payment only covers the interest, then the principal does not wind down. If you check your card or loan statement, you will be able to know the exact amount applied towards the interest and the principal.

    To get around this, make additional payments clearly specifying that they should be applied towards the principal repayment. While normally, requests for interest rate reduction will not be entertained, you can shop around for a credit card offering a zero percent balance transfer scheme for a brief respite that, however, can save you a lot of money. With loans, you will need to hunt for a replacement carrying a lower interest rate. While your credit score will dictate the rates you get, be sure to know the refinancing fees and charges before taking the plunge.

    Payments Are Being Applied Towards Fees

    When you fail to make payments on time, all card issuers will charge late payment fees. Similarly, you can be charged a fee for exceeding your card limit and for the subscription. When you make a payment, typically it is first applied to the unpaid fees, which means that there is very little impact on the accrued interest and the outstanding principal.

    To prevent this from happening, you need to understand the nature of the fees that you are liable to pay and then act so that they do not become applicable. By making your payment a few days before the due date, you can very easily avoid the late payment fee. In fact, you can instruct your bank to make the payment automatically so that it does not matter even if you forget. Always remember the available balance on your credit cards and take care not to exceed the limit. If you use your card regularly, the annual fee may be waived off with a simple request. Avoid using your credit card for cash advances as not only do they attract fees but there is no interest-free period.


    The total amount of your debt will never go down if you continue to use your cards and not make the payment in full on the due date. Remember by paying the minimum amount due, it can take years to eliminate the debt so make it a point to repay as much as possible. In case you’ve multiple cards, try and get on top of one card while making the minimum payment on the others and then progress through the rest likewise.



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