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Credit Card Dilema
Personal credit card debt is at an all time high with most people owing, on the average, over $5,000. If you're one of these people, what is the best way to handle credit card debt? First, we have all seen those television commercials where companies promise to rid you of your credit card debt. All these companies do is contact your creditors on your behalf and negotiate with them and some don't pay as promptly as you might think. You can do this yourself without the expense of a credit repair company.
First, you need to sit down with all your credit cards and create a spreadsheet on the balances you owe including your interest rates. Remember every credit card may have more than one interest rate. You may have one for general purchases, another for cash advances, and yet another for late fees or courtesy checks. These are usually found on the back or bottom of your credit card bill. If you can't decipher or understand them, then call the credit card company and ask. Once you have a good idea of what you really owe, next you need to look at your total household income coming in and all your other expenses going out. Include your rent, utilities, groceries, vehicle payments, and any other monthly expense you have.
Finally, be honest with yourself on how much you can commit to pay on each card every month. If it's only $50 or $100 then write that down next to each card on your worksheet.
Image Credit: Credit Cards Wikimedia Commons
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Now it's time to call each of your credit card companies. Don't dread these calls. All credit card companies want to receive the money you rightly owe them and most likely, they will negotiate with you. Ask if they can lower your interest rate or transfer your balances to a card with a lower rate. See if they are willing to drop late fees if you make timely monthly payments on the account. Ask about their billing cycles. Some people make weekly electronic payments through their computers. Your credit card company may still want a payment on the billing due date and if you don't process one then, a late fee is applied. Be honest and tell them weekly deposits to your debt is easier for you to handle and ask them to drop late fees if you make weekly or bi-monthly payments.
If your monthly due date doesn't fall near your pay date, ask them if they can change your billing due date to ensure your payments are timely. Try not to use your credit cards unless it is absolutely necessary while you're paying the debt down. This may take some effort, but with practice, you can do it. Take the cards out of your wallet when you shop.
Effectively managing your credit card debt is possible if you are honest with yourself and make a commitment to paying on them each month, at any level; this is the best way to handle credit card debt. No matter what those ads on TV say, you do owe what you charged on your credit cards so your best bet is to work with your credit card companies, especially during tough economic times to keep your credit score from getting tapped every month. Finally, don't apply for any new credit cards. Every time your credit report is run by ANY company, your credit score is decreased by one point.
Try using good judgment to get a hold on your credit card debt this year and make those phone calls now.
Image Credit: Credit Card Smart Card Wikimedia Commons