Spending and Saving
Dealing with Debt: Credit Cards
No, you’re not imagining it—just as everyone in the country is more strapped for cash, lenders have been raising interest rates and fees on credit cards. Miss a payment and your interest rate could rocket to 30 percent; continue to carry a balance and you could be slapped with a $10 charge.
That’s bad news in the best of times—and we know very smart people who managed to get themselves into heaps of credit card debt during the boom. If you’ve been laid off, those are extras you simply can’t afford.
We’ve already shared the latest and greatest information on handling your mortgage, especially if you’re in a financial crisis. Here’s the most current advice on controlling your credit cards. Get out before you become a victim of what some see as the next wave of the economic downturn.
As we suggested last time, do an inventory of your finances first. (Motley Fool)
This is a great time to negotiate with companies—especially if you’ve been a good customer. Asking for things like annual fees and penalties to be waived. (Chicago Tribune)
If your rates get jacked up, you may be able to decline the new card terms and pay off your balance under the old agreement, but you’ll probably have to close your account. (Wall Street Journal, last paragraph)
In recent years, there’s been an endless supply of credit, and some people might be thinking that their cards could carry them through a rough patch. Don’t count on it—lenders are tightening up, canceling cards, reducing credit lines and sending out fewer offers. (Wall Street Journal)
To save money, transfer balances to lower-rate cards, but make sure you can pay those bills on time and don’t put any new charges on those accounts—they will likely be nailed with a higher rate, and will be the last portion of debt the company credits payments to. (Motley Fool)
If you’re carrying any sort of balance (or think you might), renegotiate your existing rates. Here’s what to say. (Bankrate.com, Motley Fool)
In a pile of debt and considering having a debt relief service negotiate for you? Watch out for scams. Call the National Foundation for Credit Counseling for referrals to reputable shops. (MainStreet)
If you are able to pay off a balance with American Express quickly (and don’t want an account with them anymore), they might incentivise you with $300. (CreditMattersBlog)
Finally, credit card companies are cutting back on their rewards programs. Some are being terminated, others being made less appealing. Check that you’re not being shafted, and don’t bank your points for some big purchase down the road. (US News & World Report)
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4 comments for “Dealing with Debt: Credit Cards”
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You’re right, it is a great time to be a customer in good standing. Because I was positioned for a downturn, I have not been affected severely by the recession. I have been writing a weeklong series about debt. Stop by and check it out.
An interesting read – some good tips here
Definitely leverage some of the free Quicken like services to track your spending. Mint.com, for example, can track your spending and suggest better cards. There are a few others out there.
If you want to take credit card debt settlement advice from a professional, you should be able to trust the advisor
fully. So you need to check the credentials of the credit card debt settlement advisor/company.
There are hordes of people and companies that advertise “credit card debt settlement in one day” which will appear incredible.
Such credit card offers are generally not genuine.
You need to understand that credit card debt settlement cannot happen overnight. So, beware of such agencies. That said it’s important to mention that there are a lot of good credit card debt settlement advisors / companies available
such as Debt Solution Centers who will not only give you genuine credit card debt settlement advice but will help you throughout until you are finally out of debt.
Their advice may, in fact, more than compensate for the fee that they charge you for credit card debt settlement.
These credit card debt settlement companies / advisors will be able to help you in the best way if you tell them your current financial situation correctly.
Your future plans are important too, as they might influence the decision on ‘What route for credit card debt settlement would work the best for you’.
Once you are done with your credit card debt settlement, you should also take measures to avoid falling into serious debt again.