Nine Tips on Correcting Credit Card Problems
Credit cards afford us the luxury of paying for services and goods, but with that convenience of purchasing comes a price. The four letter word is called, DEBT. The FDIC offers these nine tips as a starting point to help you correct issues with your credit cards and subsequent credit history.
- Reduce your expenses by paying off the balance on your highest rate loans first. These are usually your credit cards.
- Pay for future purchases using cash or a check.
- If you have serious problems paying off your credit card debt, turn to a reliable credit counselor. Some can help you for little or no cost.
- After credit counseling, consider enrolling in a debt management plan (DMP). In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills,student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. A successful DMP requires you to make regular, timely payments and could take 48 months or more to complete.
- Beware of debt consolidation traps. These are loans that you get in order to help pay off what you owe on several credit cards. They can be either secured loans, such as home equity loans, or unsecured loans that you promise to repay.
- Beware of companies and Websites that charge high rates and application fees.
- Look for hidden charges. Ask for references before signing the agreement.
- Choosing the wrong debt consolidation loan can make matters worse and put you further into debt. Shop around so that you have a way of deciding on the debt consolidation loan that best meets your needs and budget. Research different lenders and collect quotes before deciding.
- Use bankruptcy only as a last resort.
