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Managing Credit Card Debt

Avoid credit card trouble
Credit cards can help you purchase dreams or lend a hand in an emergency. Along with the privilege of using your credit card to get an instant loan at millions of locations around the world comes the responsibility of managing your credit wisely. You can safeguard your credit by recognizing the signs of credit trouble and taking control of your credit situation. 

Are you in credit card trouble?
Answering yes to just one of these questions could mean you need help.

  Pay only the minimum payment month after month? 
  Take cash advances to pay daily living expenses? 
  Do your monthly minimum credit card payments exceed 15% of your take-home pay?  
  Pay important payments such as rent or mortgage late? 
  Borrow from one lender to pay another? 
  Sign up for other cards because I hit the limit on my current cards? 
  Transfer balances to new accounts to avoid paying off debt? 
  Find myself always out of cash?

Get a copy of your credit report
Credit card issuers use one or more of the three biggest credit bureaus to research credit history. Get a copy of your credit report annually from each of the three major credit-reporting agencies (Equifax, Experian and TransUnion) because each may be slightly different. You can call each of the three national credit-reporting agencies or you can contact the Annual Credit Report Service.

Fix it yourself 
 You may be able to solve your debt problem simply by managing your money a little more carefully.
  Add up your debt to get a realistic picture of your financial situation.
  Stop charging. Put away your cards.
  Read your past few statements to see how you've been spending your money. Use the information to make a monthly budget and stick with it.
  Look for areas where you can cut back, spending, and use that money to reduce your debt. Eat out less. Cancel your cable. Take the bus. Avoid late fees by paying your bills on time.

Talk to your lenders 
You should make the first call to your lenders. Don't wait until the creditor figures out that you have a problem to sort out your finances. Lenders will be much more flexible if you call them first.

Most lenders will help you rearrange your debt payments because it's in their best interest for you to get back on your feet financially. Lenders may extend your payment period, help you consolidate your debt or refinance your debt.

Seek professional counseling
These nonprofit organizations have a variety of programs to help you work through debt problems. Ask about debt management, educational materials, creditor relations and crisis resolution programs.  

National Foundation for Credit Counseling
To connect with a local credit counseling service near you.
800-388-2227

Beware of credit doctors
Their cure can be worse than the illness. Credit doctors promise to wipe away bad credit, repair your credit record or give you a whole new credit record for a price, but it may be illegal.

You can correct mistakes, with no charge to you, by writing to your local credit bureau and giving them your side of the story and any paperwork to support your claim. If bad marks on your credit record are legitimate, the best way to repair them is by paying your bills on time from now on.