Debt advice

Posted: 02/09/2007--25/11/2008 || Rate this Article: 3 || Views|| Sign In || Register ||Hello Guest

Credit cards make it easy for many people to get into financial trouble. The key is learning not to live beyond your means, no matter how high your credit limit might be. Pay off those credit cards, and learn not to spend money you do not have. How you deal with debt and credit now will affect your future.

Do not try to ignore the problem

If your monthly payments have become overwhelming, causing you to pay your bills later each month, you are accumulating late fees and causing your interest rate to rise. The problem will not go way; it is going to get much worse until you do something about it. When creditors call, talk to them. Find out if you can set up a different payment arrangement, at least temporarily.

Work Creditors like the Pros do

Many creditors will adjust the interest rate or put a halt to late fees and over limit fees when working with a debt consolidation company. Knowing this, you should be able to get them to do the same thing for you. They want their money, and if they see this as a way of collecting at least some of that money, they should be willing to work with you.

Let the Pros do it for you

If you are not comfortable trying to work out an arrangement, consider working with a professional. If you choose a debt consolidation or debt management company, be sure to read the fine print before signing anything, and check the company out with the Better Business Bureau. Also, check out any previous names used by the company. Some of these companies can be very helpful, but like any other business, some do not live up to their promises. You might also consider visiting a credit counselor. This service is different from what is offered by debt consolidation and debt management companies. It is free, and it teaches you how to handle money and credit better. The others simply allow you to make one monthly payment then distribute the money amongst your creditors. They may be able to get your interest rate or fees reduced, but they usually charge a small fee per each account, even though they are described as "free."

Do not be intimidated by Creditors

If someone harasses you or refuses to work with you, go over that person's head. Ask to speak to a supervisor, and if that does not work, speak to that person's supervisor. Written correspondence is usually the most effective, so start a paper trail right away if someone is harassing you. Document all written correspondence carefully. Send each dated item, return receipt mail, and keep the receipts. Keep a copy of each item the company sends you as well. It is a good idea to make a separate folder to keep an extra copy of everything.

Pay the Debt off as quickly as possible

If you can transfer your balances to a card with a lower rate, it might be a good idea. Read all the fine print before acting. If the low rate is temporary, it may not make sense to make the transfer. On the other hand, you can begin paying larger amounts, instead of only paying minimum payments. Apply anything over the minimum payment directly to the principal balance and begin paying it down.

Once you have your debt under control, it is a good idea to cancel most of your credit cards. Keep the one with the fewest fees and the lowest interest rate for emergencies. Obtain a debit card from your bank, which allows you the flexibility of a credit card, without allowing you to spend money you do not have.