The New Year Brings New Credit Card Debt
The holidays are upon us and a desire to give to our friends and family often leads to credit card debt that can be daunting. As the calendar ticks over to January, we come that much closer to the day the mail carrier brings those credit card bills.
1. Don’t panic! It is perhaps easier said than done, but the fact is that when armed with a clear head and a strategic plan, you can accomplish great things.
2. Open the bills and take time to review each of the purchases. In this day of cyber-crime it is possible that you may have been billed for a purchase you didn’t make. So review each line item for accuracy.
3. Note that some online purchases may appear on your bill under a company name that is connected to the Parent company and therefore, may not be recognizable. Take the time to call any company that appears on your bill that you don’t immediately recognize before disputing a charge. Get in the habit of doing this. After calling the merchant you may realize that you have had recurring charges on your card, and all you have to do to get rid of this charge is tell the merchant to stop it.
4. Take a deep breath. It is time to create that strategic plan. While paying just the minimum amount means that hefty interest rates will quickly accumulate, if that is all you can pay this month – make sure you pay on time. Ignoring the bills will lead to additional stress and credit problems in the future, so at a minimum pay the smallest amount allowed and pay it on time. At a minimum the benefit is that you won’t be getting annoying calls from the card companies.
5. Pay off those credit card bills with the highest interest in full. Read the small print to find out which cards charge the most interest; those are the ones to pay off as quickly as you can. If you cannot decipher the complicated small print, call the company. By law they have to tell you the actual interest rate.
6. Determine how long it will take to pay off all of your cards by using a credit card calculator. Credit.com offers a simple to use online tool. Enter your total amount due, the interest rate and the amount you can pay each month to learn how long it will take to pay off. Experiment with each card to see how quickly you can pay off the amount due. Although it may not make any difference in the amount of money owed, it can be a relief to reduce the number of cards to just one or two.
7. If possible – take the cards out of your wallet/purse and put in a drawer until you have the balance down to a manageable amount. This will require that you adjust your daily/weekly/monthly budget so that you can pay for purchases using just the cash you have on hand for a little while. Credit cards have become a necessary evil, major car repairs being a good example. But you must eliminate the habit of using your cards for things are not necessities. When you do that, you’ll be able to make a bigger dent into the debt without continuing to add to the total amount you owe. Some people combat depression by going on spending sprees. Do not be one of them.
8. Start saving for next December. It is never too early to set aside a little each paycheck so that you can avoid using your credit cards next holiday.
Need some help? The professionals at Bankruptcy Advocates are here to help you through creating a manageable plan for paying off your debt. The first consultation is free. Give us a call.