The median household in America has credit
card debt amounting to approximately $10,000 and needs
serious credit
card debt assistance. A lot of individuals are capable
of making only minimum payments on their credit
card balances. Paying only minimum payments will put
you in a position where it could take years, if not decades,
to pay off your credit card balances. The fact that recent
legislation makes it harder to file for bankruptcy is
all the more reason why you should make every effort to negotiate
with credit card companies to enable paying off credit
card debt balances as quickly as possible.
The best approach, particularly if you've always paid your balances
on time, is to contact your credit card company and ask them
to lower
your interest rate. Your chances of success are increased
if you let them know that you've received a better offer from
a competing bank. On the other hand, if you've been habitually
paying late, the credit card company/bank will most likely
not want to lower your rate. It's unfortunate, but habitually
paying late has in all likelihood caused the credit card company
to hike your interest rate. It is absolutely worth your while
to place a phone call and if you're lucky, you may succeed
in lowering the interest on your credit
card debt.
If you have been making your credit card
bill payments on time, requesting a lower interest
rate might be the only option available to you. Credit
card companies will not be overly sympathetic about
your financial problems if they've been receiving payments
on time. But then, if you've been late making your payments,
particularly if more than 3 months in arrears, you might have
leverage to negotiate. This leverage, however, has a few conditions.
It may be possible to negotiate a one-time lump-sum settlement
for your credit card debt balance. In this
scenario, the credit card company consents to receiving a percentage
of your debt, with the remainder written off. Credit card
companies are often amenable to doing this instead of handing
over your debt to a collection agency; from their perspective,
it's less expensive to settle. The amount of the settlement
varies, depending on interest rate, balance and payment history.
This kind of credit
card debt settlement has it's own problems, one of
which is the fact that the written off amount of your credit
card debt may appear on your credit report as bad
debt for a duration of 7 years.
Although there is no guarantee that your credit card company
will be willing to accept a negotiated debt
settlement, it doesn't
cost you anything to try. Negotiating a settlement could very
well be much less expensive then hiring a debt
consolidation firm.
Responsible Credit Card Management
Credit constitutes an agreement that allows
you to acquire goods, services or money in the present and pay
for them at a future date. Credit cards are
a part of everybody's daily financial life. They represent a
type of short-term financing, allowing for the safe, easy and
convenient purchase of goods and services by telephone or on
the web. Credit cards are also very useful in case of emergency.
Some credit cards have appealing rewards programs connected
to them. It is, however, important to remember that credit card
interest rates are typically higher than other vehicles for borrowing
money. Consequently, decisions ought to be based primarily on
your repayment ability. There is no better time to educate yourself
about responsible credit card management then
now.
Prior to obtaining a credit card, make sure to research the companies along with their respective credit card offers. Credit card companies are constantly competing for new customers, consequently it is possible to obtain a very competitive interest rate along with excellent rewards if you shop around.
It is highly recommended to try to limit how many credit cards
you own. Obtaining a whole bunch of credit cards just to take
advantage of promotions can negatively impact your credit rating.
Get rid of all inactive or old credit cards and be certain to
confirm that they are formally cancelled.
When managing several credit cards, try to transfer
and consolidate the credit card debt to the lowest interest rate card. Do not
accept any new credit card offers and make it a habit to always
read the fine print to make sure that interest rates are as fixed
as possible, not just a temporary promotion. Stay away from pre-approved
credit cards. Pre-approved credit cards typically have low interest
rates for only for a short period of time. Once the promotion
is over, a higher interest rate kicks in.
Pay off your monthly credit card bill in full. If the credit card is maxed out and you aren't able to pay it off, cancel it until the credit
card debt is repaid. If need be, a personal loan with a lower interest rate is a good way to go until you regain financial stability.
Prepare a budget plan for your purchases and be responsible with how you use your credit card. Keeping track of your daily expenditures will increase your awareness with the benefit of eliminating most unneeded spending.
RESOURCES: Credit Card Debt
FTC Bureau
of Consumer Protection - Consumer Information: Credit & Loans
Credit Report
and Score Information from Experian.com
TransUnion
- Check Your Credit Report and Credit Score Online, Instantly
and Securely
Equifax
Products: Credit Reports, Credit Scores & Identity Theft
Protection
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Personal Finance
Money Tip: Be frugal and give your car a break. Walk, use
your bicycle, or utilize public transportation. You'll
save money on automobile payments, gas, parking costs,
and speeding violation tickets. |
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