Most debt problems begin innocently enough – you see
something you want to purchase, and although you don't
really need the item immediately, you don't want to delay
the purchase until you have the cash to pay for it. A
store credit card seems like a convenient way to get
something now that you had already planned to buy later.
If you are adept at managing your finances, a few
extravagant purchases now and then are probably harmless.
Problems begin when people begin to use credit cards or
other kinds of credit impulsively, and the balances on one
or more accounts grow beyond their ability to repay the
debt quickly. Debt, especially credit card debt, can
accumulate rapidly, and many people soon find themselves
barely able to make the minimum monthly payments.
Whether you are already overwhelmed with credit card debt,
or simply want to prevent debt problems before they start,
there are steps you can take to keep the compulsion to
overuse credit cards in check, prevent minor credit card
debt from spiraling out of control, get out from under
excessive debt, and repair your credit.
One strategy that can work to keep you from overusing your
credit cards is to put them in a place where they are not
easily accessible. If you have to go through some trouble
to get to the cards, you will have time to reconsider the
purchase you want to make. Before you begin cutting up
your credit cards, remember that if your credit is already
damaged you may have a difficult time getting approved for
a new credit card. You may need the card at some point to
deal with an emergency.
When it comes to the business of reducing your credit card
debt, you have a number of options. If you are behind on
some of your accounts, contact the creditors and explain
your situation, expressing a willingness to make good on
the debt. They will often be accommodating and allow you
to restructure your payments, or assist you in getting
caught up. It is much less trouble to work with you than
it is to turn the account over to collections.
Repaying your credit card debt will take less time if you
have a solid plan. A proven method of reducing debt
quickly is called debt-stacking. Also known as accelerated
debt payoff, debt-stacking works as follows: First,
determine the interest rates that you are paying on each of
your credit card accounts, or for that matter any other
debts you wish to pay off. Decide how much you can afford
to put aside for debt repayment each month, and pay only
the minimum monthly payment on all the debts, except the
one with the highest rate of interest. Then, apply
whatever money you have left over toward the account with
the highest interest rate. When the highest interest rate
account is paid down, repeat the process concentrating on
the next most expensive debt. This method of debt
repayment will shave many months off of the total time it
takes to pay off your debt.
A surprising number of people have inaccurate items on
their credit reports. You should review your credit
history report from all three of the major credit reporting
agencies, as there is probably some unique information on
each report. Take note of any entries that look
suspicious, and if you conclude that they reflect
inaccurate information you have the right to make
corrections and have the items removed.
As you continue to practice responsible use of credit
cards, your credit score will gradually improve. Bad
credit can have a snowball effect, growing out of control
before your eyes. Likewise, good credit practices over
time will create momentum in increasing your credit score.
As your finances improve, continue to increase the amount
of money you apply toward savings so that when financial
surprises occur, you will be able to deal with them without
having to resort to using credit cards.
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Gregg Pennington writes articles on a number of topics
including loans, debt and credit. For more information
about debt help and credit repair visit:
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