When you see or hear a credit card balance reduction advertisement, two points will probably never be mentioned. That will mislead you about credit card usage.
One, is that you pay income tax on any amount of debt you have reduced. Therefore, cutting that balance is not as simple as it may appear. Reduce your balance by $4,000 and it’s as if you had a taxable gain. Something for an accountant to consider at tax-filing time.
Two, you have also hurt your credit standing by resorting to credit card debt reduction. This may not bother you at first, but it may eventually cost you.
And another point: How many folks who have so much credit card debt, they have to resort to drastic measures, are actually permanently getting out of debt?
You can be sure their spending habits will be getting them into the same situation again in a few years.
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