Everybody with a credit card knows it’s smart to pay what you owe at the end of every month. Internet shopping increases the temptation to overspend, since cash or checks are rarely an option if you’re online to shop.
Aside from curbing your internet shopping, consider these ways to get out of credit card debt.
First things first. Stop running up balances!. If you carry a balance from month to month, stop using credit cards entirely. If you don’t have the discipline for it, put the cards into storage or cut them up.
Find your best offer. review the fine print on all your card contracts to make sure you owe the most money on the card with the lowest interest rate. If not, investigate the costs of transferring balances. It’s a good idea to also hold on to every solicitation you receive. Look for the best introductory rates, perhaps six months at 5.9 percent or lower, and consider transferring all your balances to the new card. Be careful with these offers, though,there is usually 1-5 percent transfer fee, or a set fee, whichever is less. If you’re transferring from several cards, you can get hit with a fee for each card. It’s important that you also know what your interest rate will switch to after the promotional period ends. Make sure it’s not higher than the one you’re switching from. If, after six months, you want to switch cards again to take advantage of another introductory offer, be certain you won’t fall subject to a penalty. READ THE FINE PRINT! Credit card companies protect themselves against card hopping by restricting terms on introductory rates. Sometimes they apply only if total balances are paid off within the promotional period, or worse still, kept with that bank for at least 12 months. If neither of these provisions is satisfied, you could face retroactive interest charges at the full rate the minute you transfer to another card.
Stop the solicitations. If you are in credit card debt, the last thing you need are countless platinum card solicitations. As a consumer, you don’t have to put up with it. Say no to unwanted solicitations. When you’ve settled on the one or two credit cards that will help consolidate and eliminate your debt, contact one of the three main U.S. credit bureaus and have yourself removed from all prescreened credit offer lists (those credit bureaus are Equifax, Experian, and Trans Union and can be contacted at http://www.equifax.com/, http://www.experian.com/, and http://www.tuc.com/, respectively). They’re required to notify each other of your decision. This action will also limit your risk of identity theft. Thieves can easily intercept solicitations, use their own name and address, and max out the card before you even know about it.
Pay more than the minimum. The more you pay down every month, the faster you get rid of the debt, so set your own minimum payment. If you make only the minimum monthly payments, it will take you years to pay off the balance! And along the way, you’ll pay a ton in finance charges. The minimum balance payment is designed to benefit the financial services company so they can earn interest. Scrape together everything you can each month and send it in.
Renegotiate terms with your creditors. Contact your creditors and ask for a new, lower repayment schedule. You could be surprised by their reaction, particularly if this is the first time you’ve gotten into real trouble. You could tell them you have a preapproved offer from another bank and would like them to match the terms if they wish to keep you as a client. If it’s clear you are in debt crisis, let the banks know this is a call of last resort short of filing for bankruptcy. Creditors will do what they can to protect themselves against a total loss.
Create a budget and live by it. Technically this should be the first step, but it may not be possible to create a budget until you’ve settled your accounts and counted what’s left over, if anything. This may be the time to ask yourself the tough questions such as what it is about your lifestyle that allows debt to happen in the first place. Is your apartment or house more expensive than your income allows? Are you a shopaholic? Are you having too much fun? And so on. If any of these factors is precipitating debt, consider taking aggressive steps before trouble starts again.
Tags: balance transfers, budget, credit card debt, fees, finance charges, online purchasing, reduced interest rates
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