Credit Card Debt Help
From LoveToKnow Creditcards
There are many avenues to take for credit card debt help. Simply by clicking on this article, you’ve taken the first step: gaining more knowledge on how eliminating debt can be accomplished.
Prioritize Debt Payment
Remember, if you don’t pay off secured debts, such as housing and transportation, they can be foreclosed on or repossessed. Since losing a place to live or means of transportation can be disastrous, these responsibilities take first priority.
Other secured debt can result in a garnishment of wages, so arrange workable payment plans for debt such as student loans, health bills and child support.
Unsecured debts is the category credit card debt falls into, so whatever is left in the budget after prioritizing debts can be applied to this type of debt. By planning to pay off this debt, you avoid the hassle of collections, the worry of making ends meet and ruining your financial future.
Credit Card Debt Help: What You Can Try First
Check Your Credit Report
Before putting your plan together, request a free credit report so you can understand how your credit history looks to others.
You’re allowed one free report a year, so once you accomplish your goals regarding credit card debt help, make sure your future financial management includes reviewing your credit history regularly.
Paying More Saves Time and Money
Let’s play with a simple formula. You have one credit card that you’ve decided to pay off. You’ve cut up the card in order not to use it again.
Amount owed: $3,000
Suggested minimum monthly payment: $30
Just to demonstrate the basics of this formula, we’re not factoring in interest.
If you only pay the minimum suggested by the credit card company, it will take approximately eight years to pay off that $3,000 balance. Not including interest.
But if you can truly focus on increasing the amount you pay per month to $90, you’ll have that balance paid off in about three years. So that’s why prioritizing the payment of highest interest rate cards first and concentrating all available funds to increasing monthly payments will help you reach your goal more quickly.
Renegotiate With Credit Card Companies
Make no mistake: credit card companies want your money. As much as you’re willing to give them. However, they’re also open to negotiating different terms when asked before there’s real trouble or a third party requests a compromise.
Depending on your standing as a customer, one phone call can change:
- Annual fees
- Interest rates
- Late fees
- A change in billing due date
- A payment schedule for past due/high balance amounts
One possibility: pay off the highest card first, and your credit score will rise. Wait a few months, then renegotiate with other credit cards to lower interest rates on other cards as you’re still paying them off.
Another possibility: pay off the highest card first, wait for credit score to improve, then make a balance transfer of all other cards to one lower interest rate card.
Cut up the other cards to avoid temptation, but leave the accounts open as you continue to mend your credit.
Little Payments Make a Difference
From each paycheck, carve out what it will take to pay the debt down. This is really easy. Remember, dinner for two at McDonald’s runs about $10. What if that money was applied to your credit card debt and you had a salad at home? Your physical and financial health would improve exponentially.
Lately, many financial experts have been touting the benefits of consumers examining where they spend little bits of money they don’t think about, and how budgeting can really make a difference to their financial well-being.
Considering Other Options
Sometimes additional income or savings is the only solution to credit card debt help, enabling you to do more with more. But where will that additional money come from?
Here are some common alternatives:
- Asking for a raise at your current position or searching for a new job.
- Taking on part-time work specifically to use the additional income to pay off debt.
- Reducing the clutter in your home by holding garage sales and using all profit as extra credit card payments.
- Taking out a small loan and cutting up all credit cards. This is really a last resort option as to not run the risk of getting deeper in debt.
Credit Card Debt Help: Calling in the Professionals
If you’ve tried all these methods and still feel overwhelmed, it’s probably time to turn to a consumer credit counselor for guidance. Not only will they help you regain your footing but also increase your financial education so you can create a better life for yourself
Understand Why You Spend the Way You Do
This is tricky, because there is no one answer that covers everyone. However, to secure a better financial future, it’s necessary to have an idea of why you needed credit card debt help: how did you spend, what instigated the circumstances you’re in now and most importantly, how can you change certain behaviors to make sure you can avoid credit card debt from now on.
One alternative that may be of help is Debtors Anonymous. Many have found the fellowship and resources of this organization lessens the burden of finding a way out of debt and provides ample support for achieving financial goals.
Learn More
This page has been accessed 1,741 times. This page was last modified 14:01, 4 November 2008.
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