The slowdown in today’s economy has prompted all of us to take a closer look at our finances and to think about what would happen if we lost our job. For so many people today, the scariest part of that idea is what we would do about our credit card debt. It’s so pervasive that there are few people who don’t have outstanding balances on one or more credit cards. Here’s what you should know.
1. Keep paying the credit cards. Missing a payment on one account can cause the others to raise their interest rate also, even if you’ve paid them promptly for years. Sounds unfair, doesn’t it? It’s called universal default and it’s very real. A missed payment can stay on your credit report for years.
2. To make matters worse, if you miss a payment to one card all of your other cards may raise their interest rate in what they call a “universal default”. So even if you’ve paid on a card religiously, you may get hit with an increase for missing a payment on an unrelated card.
3. Credit cards aren’t inherently bad. They have their uses and they are an essential part of commerce today. But you should only use them when absolutely needed because too many maxed out credit cards can quickly lower your credit score making you have to pay higher interest rates.
4. When you have your spending under control, you’ll need to make a commitment to yourself to spend only what you can pay back at the end of the month. Set the credit cards aside and stick to the road to becoming debt free.
5. Know what your spending is on each card and compare their interest rates. You may be shocked to find out how much you’re paying in interest and how long it will take to pay the money back.
6. Use cash. You don’t want to add to the problem while you’re trying to work out a plan. It just doesn’t make sense to keep growing your monthly credit card obligation.
If, after reviewing your standing with your credit cards, you find that you are dangerously close to default, please ask for help. There are businesses out there who are ready to work on your side to get your financial ship back on an even keel. Then follow through with the plan. It won’t be easy to trim your spending or work more hours or whatever it takes to but your budget in balance. It will be worth it, however, to silence the harassing phone calls and the nasty letters. Just think of the day when you can use your debit card freely because there is plenty of money in your account to go around.
Is Your Credit Card Debt Out Of Control? Debt settlement is an outstanding alternative!Before filing for bankruptcy, go to Arc Financial, we have the experience negotiating with creditors and get more information on what is a debt settlement strategy today!
