Thrifty Mommy

10 Tips for Handling Credit Card Debt

by Karen on April 7th, 2008

According to ABC News, “the nation has 80,000 fewer workers on payrolls this month when compared to last . . .  This is the biggest one-month contradiction in job markets since March 2003.”  Many people are being laid off from their jobs and are having a hard time making ends meet. 

I was listening to The Cooper Lawrence Show podcast from Thursday night and one of the listeners called in with a credit card problem.  The caller is having a tough time right now making ends meet.  The credit card company keeps charging her late fees, which have caused her to go over her credit card limit, so in turn they’re charging her fees for being over the limit.  She can’t get ahead because of all the fees they’re charging her.  She has tried to call the company to work something out, but they keep saying like, “If you’d only give us $200.”  She told them she doesn’t have an extra $200, but the company just doesn’t seem to want to help her. 

Many people have found themselves in similar situations.  Here are some tips to help you handle your credit card debt:

1)  Ask for a one time courtesy waiver.  If you have been a good customer in the past, then there is no reason why they shouldn’t waive fees.

2)  Pay as frequently as you can.  Paying $25 a week is much better than paying $100 each month.  If you pay $25 a week, then that amount will be paid to the principal sooner and avoid more interest.

3)  Don’t ignore your debt.  Your debt is your ethical responsibility.  If you are having troubles paying your debt, then you should call the credit card company to see if they can work something out.  Ignoring the debt will only make things worse. 

3)  Don’t just speak to the first person.  The first person you talk to has been trained to tell you “no”.  Ask to speak to their supervisor.

4)  Document everything.  This includes every call you make to the credit card company, the date, time, person’s name that you spoke with, and what you were told.

5)  Pay your credit card payments last. You should pay your most important bills first - your rent or house payment, electric, phone bill, and then your credit card.  Many times the loudest voice is the one from the credit card company.  They usually scream the loudest and use manipulation tactics to scare you into making your payments.  Your debt is your obligation, but when times get tough, they are the last ones to pay.  You need a place to live and electric, but you don’t have to have a credit card.

6)  Find a way to make some extra money.  If you feel like you can’t breathe and you can’t ever get ahead, then try some ways of making extra money.  Get a job delivering pizza a few nights a week, even if it’s only for a few months.  Start going through closests and sell the stuff you don’t need.  Try Craigslist, ebay, a local classified paper (that has free ads), or have a yard sale.  Put all of that money towards getting caught up or paying off your debt.  In the past few months, I have sold sheets, kid’s clothes, my old vacuum cleaner, toys, and some other things.  I’ve brought in several hundred dollars.  It’s like having a second job.

7)  Get a credit counselor.  Dave Ramsey’s site is a place to look for help.  I like Dave Ramsey’s tips because they are practical ways that are effective.

8)  Freeze your credit if you’ve been the victim of identity theft.  Credit bureaus don’t let you know that you can do this though, because they won’t make money off selling your information.  Some states will let you freeze your credit before you become a victim.  For more information, take a look at Financial Privacy Now.

9)  Find out what’s causing the debt.  Sometimes it is caused from unfortunate circumstances such as unemployment or divorce, but many times it is from behavior and choice.  Are you an impulse shopper?   Do you buy more clothes than you need?  Repair the holes in your budget.

10)  Be leary of companies that offer a quick fix solution.   True debt help is not easy.  You need to fix behaviors that may be causing the debt.  Debt consolidations, bankruptcy, and credit repair companies sometimes are no help if behaviors have not been changed.

11) I am offering this one as a bonus, since it may be hindsight.  Hopefully it will help someone though.  Before getting a card, avoid getting a one from a company with a bad reputation.  In a survey from Consumer Reports, Providian rank the lowest.  Following right behind at the bottom were Capital One, Bank of America’s MBNA division and JP Morgan Chase. (source)

Do you have any tips to offer?

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POSTED IN: Top 10 lists, cooper lawrence, financial matters