Excessive debt from credit cards can be seriously detrimental to your credit status, obstructing you from getting a car loan, a mortgage, or even a department store credit card. And if you ever have to file bankruptcy, you are in for a real blow – it will be on your credit report negatively affecting your credit rating for seven to ten years.
If you are one of the many people who are burdened by credit card debt, stop worrying and start doing something about it! Here are some tips that will help you minimize your current debt, as well as suggestions that will help you avoid future debt.
- If you ever want to get rid of your credit card debt, the most important factor is paying more than the minimum balance every month. Do not forget that you must also pay on time or you will be adding a finance charge to the total, thereby increasing the minimum payment for the following month, as well as a larger finance charge the next time you do not pay on time.
- A system of debt consolidation for credit cards has proven to be effective for many people in this situation. You need your own deadline for paying bills, and software systems designed to do just that – such as Quicken or Microsoft’s Managing Your Money. These computer programs will help you keep track of your financial records, and some even assist with writing checks.
- Negotiate with various credit card companies. While you cannot simply make your debt disappear, you can switch which credit card company you have to pay. Sometimes just speaking with your credit card company and telling them you are having financial difficulties and need a lower interest rate will work. Otherwise you can create a bargain battle between companies. Perhaps you contact a company that will pay off all your old credit card debt at 8.9 percent if you switch from your current company to theirs. You can tell your company the offer and see if they will come up with anything better. All you have left to do is choose the lower offer.
- If you have a limited budget for debt reduction, writing letters to all of your creditors explaining the situation can help ease the tension. Letting your creditors know what your plan of action is (i.e. when you will be able to start repayment for each) and coming forward with your situation will likely make the creditors appreciative for your open communication and perhaps they will be a little nicer in the process as well.
- If you have a limited budget for debt repayment, it helps to write down what you can pay each creditor each month. Develop a ratio of how much you owe to each creditor and then pay that percentage of your repayment funds to each creditor each month.
- The best piece of advice for dealing with credit card debt is to keep your cool. Some creditors are taught to be mean and nasty, but if you have a plan and stick to it you will be fine and eventually debt free!
By Monica Drusch