What to do about credit Card Debt

Are you worried about your credit card debt?   Knowledge is power!  Please read on to find out what you can do to take control of your credit card debt, and the things your shouldn't do.

I believe one of my New Years Resolutions is going to be trying to get out of Credit Card debt. I used to be proud of my credit score and my credit line. But that is what gets you into trouble. If you break down your credit cards and actually look at what you are paying interest it is very disheartening. I try not to look at the numbers and go on my merry way. (yep I am one of those people, If I hear a noise in my car I will turn up the radio)   But you have to look at the numbers you have to do the math and sit down and fix what you created. With Credit Card rates going sky high it is a difficult thing to fix. I kinda compare paying off credit card debt to the War on Terror. With either thing there are no winners. So what can you do? Lets take a look at what help there is out there to get out of this mess!

So you have made the first step. You looked at the numbers and go t the sick feeling in your stomach. So you have decided to make a decision about doing something about it and not turn up the radio and ignore it. (my car metaphor!) The second thing you need to do is take those credit cards you have out of your wallet. Not all of them. We want to allow for emergencies. No doubt you have more than one. Take the credit cards you have that have a high balance or interest rate and lock them away. The temptation not to use them will be gone if you don't have them on you!. You want to stop using the cards. You may have gotten int bad habit using them as a crutch or having some irrational thinking about them. May thought was.. I pay the what they ask for every month. I use my credit Iines to use as I would like. well It is not really your money when you are paying interest is it?

Next step is to just pay them off or seek assistance. You may have seen an influx of advertisements of organizations wanting to help you get out of debt. They are often making reference to the Bill passed by Congress to stop the overinflated interest rates. They want you to think they are on your side! They will use President Obama's name as if they are working with the government to help you. Beware! These organizations are looking to cash in on your troubled times. When dealing with a Company that claims they can help you with your debt it is best to run their name through the Better Business Bureau website.  This Website can provide you with a rating on the company.  This will give you an idea how reliable they are.  There is a link posted below!

While researching what to do about Credit Card Debt, I ran across some sound advice from Suze Orman. She states to avoid being a victim of high interest rates we need to get out of credit card debt now ( hmm duh??) She recommends paying more than just the minimum payment on the card. Paying just the minimum all of the time signals that you are a high risk user and they may cancel your account. She recommends to go to cardtrak.com and look for a card with a low balance transfer rate and see if you can get your balances transferred to one card with a low interest rate and then push yourself to pay it off. (This advice was written in the beginning of 2009 so low rates may not be available anymore) The second bit of advice she gives is for you to line up all the credit cards you have . Take a look at the one that has the highest interest rate and focus on paying it off first. If you do need some credit counseling or help she recommends the National Foundation for Credit Counseling. The link is below. The credit counseling website has a lot f consumer tools an calculators to use to help you manage your financial debt.

Many times we have seen commercials promising us they can help us settle our debts with the credit card companies. BEWARE. The National Foundation for Credit Counseling states the Debt Settlement is a serious thing that should only be tried after you have tried other options. The Foundation stresses the the Credit Card Settlement companies do not have any more special privileges than we the consumers do. The Credit card settlement companies will charge you a fee and you may end up paying the Credit Card Settlement company more than you owned in the first place. You the consumer can discuss your situation on your own with your credit card company. Arrangements for settlement can be made directly between you and the credit card company without a third party trying to get your cash. Remember the the settlement itself will affect your credit score!The Debt Settlement companies will be causing you to have a low FICO Score because they will be holding your money. Working with these type of companies does not guarantee that you will not be sued or held accountable for the bad debt.

You can go through a creditor to obtain a debt management plan.  This means your crediting agency will send out your payments for you.  If you get involved with a Debt Management Plan it will not affect your FICO score.  You will not be penalized for getting involved with Debt Settlement.  Your credit report may have a mention on it.

o get a good view of your credit situation look at your credit report. There are several agencies on line the at will give you your credit report but remember you should not be charged for this. Even the singing pirate waiters try to charge you. Be aware  a lot of time the credit report companies will tell you it is free trial that you have to cancel after 30 days. If the website is asking you for a credit card number then you do not want it!. Often they will offer a little temptation of paying to have your credit score monitored.

Holiday Spending

The National Foundation for Credit Counseling asks the question should we be shopping for Christmas? If your answer is yes to two or more of the following questions then a Holiday Shopping spree should be on hold.

  • There are arguments in my home about money.
  • I sometimes hide my purchases.
  • I have thought about filing for bankruptcy.
  • I struggle to make my mortgage payment.
  • I sometimes pay my bills late.
  • I have used more than 30 percent of my available credit lines.
  • My debt interferes with my sleep, job or home life.
  • I have little or no savings.
  • I am receiving collection calls or notices.
  • If I lost my job, it would mean an immediate financial crisis in my life.

Yes I know the above questions were a bit disheartening. I know I would answer yes to at least three of the those questions. But now I like many of you have to make some choices about my spending before the decisions are made for me. More than ever I need to curb my spending and have already done so. I don't go to the supermarket every week. I use coupons only when they are the best deal. I bring my lunch to work and I stay home more often. I make sure to pay all of my bills on time before I even consider going to a movie or out at all. I even try to pay cash anymore.

 I know there are new credit card rules coming as soon as possibly December.  But will it be enough?  For me it will will be too little too late. The credit card companies continue to raise their interest rates and cut my credit.  They will do what they want.   I will continue to muddle along and make my payments and try to use my credit cards less.  Even though these new rules are being imposed on the credit card companies it will be ultimately us the consumers that pay for it anyway.