Tips For Dealing With Credit Card Debt

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Struggling with credit card debt can cast a black cloud over every aspect of your life. The longer you stay in debt, the more damage you’ll end up doing to your credit rating. That in turn will make it harder to get a loan in the future for important borrowing like a home mortgage. Not to mention that fact that debts limit your spending power in the present, restrict your options, and generally have a negative effect on your emotions and outlook.

So it pays to get on top of your debts as soon as possible – but how? Here are a few tips you can start applying today to turn your debt situation around.

Negotiate with Your Lender

In many cases you can actually negotiate with your credit card company in order to make paying your debt easier. There are several options available here – for example, you may be able to have your interest rate lowered. You may be able to extend the period you have to pay before you start incurring more penalties, or you may be able to have some fees waived altogether. In any case, the first step is to contact your lender and see if there’s a way you can reduce the burden of the debt.

Pay the Most Expensive Debt First

If you have multiple credit card bills, you need to work out which one is costing your the most in interest and focus solely on paying that bill first. That’s the fastest strategy for paying off the debt. You know to work out which bill is costing you the most in interest – the sooner you pay that bill, the less interest you’ll incur and the lower the overall amount you have to pay back will be.

Make Debts the Priority

Often people end up in credit card debt to begin with because they can’t manage their money and try to live beyond their means. If you have bad financial habits, they’re the reason you’re in debt – and they’ll keep you in debt if you don’t change them. You’ll need to develop the self-discipline to say no to non-essentials until you have your debts handled. If you’re in debt, don’t go spending money on concert tickets and most definitely don’t take on any more debts.

Debt should only be used for things that will help you get to a better financial position in the future – things like buying a house, starting a business or getting an education. If you take out a new debt every time you want to buy a consumer item on impulse – new shoes, a car, a holiday – you’ll just keep digging yourself into a deeper hole.

Summing Up

Credit card debt may seem like it’s impossible to beat, but with a few phone calls to your credit card company and a change in your financial habits and mindset, you can start turning your life around from today.

Secrets The Credit Card Companies Don’t Want You To Know

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Everytime I hear these ads I just want to scream! DON’T DO IT! I know it sounds tempting. I know you have lots of debt and you don’t know how you are ever going to get out from under it, but trust me, this is one secret you don’t need to know. So this is how it goes. According to Debt Elimination Companies there are secrets the credit card companies don’t want you to know. If you have $5,000 or $10,000 or even $20,000 in credit card debt, just call this respectable sounding debt reduction company(DRC). They will use their secret powers with the credit card companies and eliminate 40-60% of your credit card debt.

Don’t believe it for a minute! Your scam alerts should be going off big time!

How this works is you sign up with debt reduction company and pay them a nice big fee. It can be as high as $3,000. You might even put it on your credit card. It’s OK, they are going to save you thousands of dollars, and even their fee that you just put on your card will be reduced by 40-60%. Then they work with you to come up with just one monthly payment that is less than the mulitple payments you are currently making to your credit card companies. So far so good. But then, instead of sending your payments to your credit card company, you send the payment to the DRC. All is well for a month or two. And then the phone calls will start. Nasty phone calls from people demanding that you pay your bill. They might even call you at work! You see, the DRC has not been making your credit card payments. They have been holding onto the cash. If you call them and ask them why, they will tell you it is all part of the secret. Be patient, don’t let the phone calls get to you, and keep sending your payments to the debt reduction company.

So here is the secret the credit card companies don’t want you to know. If you don’t pay any of your credit card bills for over 90 days, your credit report will become full of the dreaded “90 day lates.” This totally trashes your credit score. Some say it is worse than going bankrupt. The credit card companies decide you are a no good bum. They are pretty sure they are never going to see their money again. Then, if you offer to settle your debt with them, even for way less than you owe, they might just take you up on the deal.
After all, some money is better than no money.

This is where the DRC is supposed to step up and take all those payments you have been sending them (minus fees of course) and negotiate for you to settle your credit card debts “for pennies on the dollar”. But many people find out at this time that the DRC has taken their money and left town. So now you have even less money to pay the credit card companies and your credit rating will take years to recover.

So now you know the secret. If you are becoming overwhelmed with credit card debt there are better ways to handle it. Contact the Association of Independent Consumer Credit Counseling Agencies. They will set you up with a legitimate credit counseling service in your area where you will learn money management skills and work out a payment plan that won’t leave your creditors hating you. You might even get a lower interest rate, and sometimes some forgiveness on your credit card debt.

Debt Free Forever – The Credit Card Pay Off Plan

This is the third post in a series that will explore how you can become debt free, and stay debt free forever. Future posts will talk about when you should and should not use credit cards for purchases. Why you should care about your credit score, how to save money on every day expenses, will credit repair companies help you or hurt you and much more. Make sure to subscribe to our feed so you don’t miss a single installment of this series.

Make sure you have read parts one and two of the series before reading this.  You also need to have done the previous assignments before you can start paying off your debt.

Now, in part 2 you filled out a worksheet that listed all your credit cards, the amount you owed, the minimum payments on your credit card, and the amount you are actually paying.   Hopefully you are paying more than your total minimum payments each month. If you are paying only your minimum payments, or if you are not even paying your minimum payment, we will need to get into some advanced strategies. I’ll save those for the next post.  But I have found that most people who want to pay off their credit cards,  pay more than their minimum payment each month, sometimes quite a bit more! But this can cause problems.

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