Big Credit Card Debt Can Kill Your Credit Score
Credit cards are easy ... too easy. The little applications come to you in the mail already filled out, and all you have to do is sign your name and you're in. At first it seems too good to be true.
Then you get the card, and it's easy to use. It's just as easy as your debit card, except it doesn't hit your bank account ... yet. It hits your credit card debt, which is a killer. It's very easy to keep spending and spending, and it's very easy to lose track of how much you have spent.
Before you know it, you have huge credit card debt, the card company doesn't care, and you're stuck making minimum payments at 20% for the next 30 years. You've gotten used to spending, so you quickly find you are living beyond your means, and collection calls begin. There HAS to be a way out!
They way out is to repair your past mistakes. Get rid of the credit card debt. Call the card company and ask them to work out a payment plan with you. Most of the time they are interested in getting their money back just like you are, so you can probably strike a deal for a reduced interest rate in exchange for a larger payment.
As soon as you get off the phone, cut up the card. Don't trash it, because you might need the number for confirmation on a report or something, but cut it up so you can't use it. Put it in a baggie and bury it in the closet, in your sock drawer, or somewhere else it is safe and you are not likely to pull it out and use it. Stopping the spending is critical.
However if you made the major mistake of using more than one card; you will likely be getting hounded from those companies to make payments as well. Simply telling them you are paying off a larger debt to a different company will get them off of your back, yet they will want to work something out.
Never give the details of the plan you made with the other companies to pay back the debt as most calls are now recorded for legal purposes. Make sure they know that you are not made of money and will need their complete cooperation if they really want to set up a payment plan. Keep your spending in reason though so the payments do not overwhelm you.
After all these arrangements, there might be another bill that you forgot about. If you cannot pay, don't lie. Apologize to them. Let them know that you have made arrangements with however many other places, and your income is fixed, but you will be happy to call them monthly to update them on your status. Stay in touch so they know your intentions, and you may find the collectors working on YOUR terms!
Then you get the card, and it's easy to use. It's just as easy as your debit card, except it doesn't hit your bank account ... yet. It hits your credit card debt, which is a killer. It's very easy to keep spending and spending, and it's very easy to lose track of how much you have spent.
Before you know it, you have huge credit card debt, the card company doesn't care, and you're stuck making minimum payments at 20% for the next 30 years. You've gotten used to spending, so you quickly find you are living beyond your means, and collection calls begin. There HAS to be a way out!
They way out is to repair your past mistakes. Get rid of the credit card debt. Call the card company and ask them to work out a payment plan with you. Most of the time they are interested in getting their money back just like you are, so you can probably strike a deal for a reduced interest rate in exchange for a larger payment.
As soon as you get off the phone, cut up the card. Don't trash it, because you might need the number for confirmation on a report or something, but cut it up so you can't use it. Put it in a baggie and bury it in the closet, in your sock drawer, or somewhere else it is safe and you are not likely to pull it out and use it. Stopping the spending is critical.
However if you made the major mistake of using more than one card; you will likely be getting hounded from those companies to make payments as well. Simply telling them you are paying off a larger debt to a different company will get them off of your back, yet they will want to work something out.
Never give the details of the plan you made with the other companies to pay back the debt as most calls are now recorded for legal purposes. Make sure they know that you are not made of money and will need their complete cooperation if they really want to set up a payment plan. Keep your spending in reason though so the payments do not overwhelm you.
After all these arrangements, there might be another bill that you forgot about. If you cannot pay, don't lie. Apologize to them. Let them know that you have made arrangements with however many other places, and your income is fixed, but you will be happy to call them monthly to update them on your status. Stay in touch so they know your intentions, and you may find the collectors working on YOUR terms!
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posted by Credit Counseling at
1:34 AM
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