Getting a handle on your credit card debt

Monday, May 19, 2008

Most of us have them. A lot of us hate them. And a few of us are unable to make ends meet without them.

Intended simply to build some flexibility into the budget, credit cards have become a crutch for millions of Americans.

Americans owe more than $900 billion to credit card companies, according to the Federal Reserve, which works out to more than $2,000 per household.

If you're buried in credit card debt or struggling to make monthly payments, consider a few of these tips:

• If you have multiple cards, pay down the one with the highest interest rate first. Make the largest payment you can afford every month on that card, while making minimum payments on the others. You'll save money in the long run.
  
  
• When the card with the highest interest rate is paid off, move on to the card with the second-highest rate.
  
  
• Call your credit card company and ask it to lower your interest rate or negotiate more favorable payment options. But keep in mind, the company may be more likely to cooperate if you're in danger of defaulting.
  
  
• If the credit card company refuses to work with you, tell its representative you're thinking about switching companies. If it still refuses to work with you, transfer your balance to a card with a lower interest rate.
  
  
• Once you finally pay off a credit card, don't close the account. Doing so can damage your credit. Keep the card, but either leave it in your wallet for emergencies or pay off the balance every month.
  
  
• If you have trouble controlling your spending, leave your credit cards at home when you shop. That way, you won't be tempted to spend money you don't have.

Source: http://www.nashuatelegraph.com/apps/pbcs.dll/article?AID=/