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Credit Card Debt: Nearing Record Default Rates

Created: On December 2, 2009 @ 7:33 pm In

Fitch ratings reports that credit card defaults (defined as delinquencies of 60 days or more) reached near record levels during October, for an overall default rate of 4.41 percent. Citing unemployment as the primary cause for struggling debtors skipping payments, Fitch suggests that debt burdened consumers may have a way to go before economic and labor concerns wane. In these uncertain times, eliminating [1] credit card debt is a critical aspect of [2] debt management and financial planning.

Credit Card Debt: Holiday Season Can Create Problems

It can be tempting to fill your wallet with credit cards and head out to the malls or to your computer for online shopping.  Instead of invoking the shopper’s battle cry of “Charge!” take control of your finances by creating a cash based budget, putting the plastic away, and planning your holiday shopping.

Your Morning Latte and Your Cash-Based Budget

It isn’t realistic to expect consumers to give up all of their pleasures, but cutting back is an important part of paying off your credit card debt. Having a [3] latte now and then isn’t likely to sabotage your budget, but it is important to save for emergencies, other unplanned expenses, and your future. When developing your cash based budget, don’t forget to include monthly contributions to savings and retirement accounts. Having savings can help avoid a major plastic meltdown when your car needs a new transmission or your dog breaks a leg.

Shopping Trips and Traps: Don’t go without a Plan

  • When you go shopping, always have a list, and next to each item on the list, pencil in a spending limit.
  • Leave your credit cards at home. Carry a debit card or checkbook instead.
  • Politely (and forcefully) decline offers to earn discounts and bonuses for opening new credit card accounts.
  • Don’t deviate from your shopping list. Eliminate “Just this once” and “It’s such a good deal” from your vocabulary and rationale for impulse buying.
  • When you’ve bought everything on your list, depart the retail scene. Don’t hang around to browse. If you’re shopping with a friend who suggests having coffee or lunch, leave the mall, and pay cash for your meal or refreshments.

Getting Debt Help: Debt Consolidation and Credit Counseling

For many, using self control with spending is not a strong point (you didn’t get into [4] credit card debt by “just saying no.”) If you’ve tried unsuccessfully to pay off credit card debt, getting debt help from a [5] credit counseling service can help you establish a budget and an affordable debt repayment plan. Credit counselors typically work with all of your creditors to develop your plan. You pay the credit counseling service, and they distribute funds to credit card companies according to your payment agreement. Don’t hesitate to get debt help if you’re struggling; the sooner you find a solution the sooner you can be free of credit card debt.

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2009/12/02/credit-card-debt-nearing-record-default-rates/

URLs in this post:
[1] credit card debt : http://www.debthelp.com/debt-consolidation/credit-counseling.html
[2] debt management : http://www.debthelp.com/kc/22-right-time-contact-debt-management-company.html
[3] latte: http://www.soundmoneymatters.com/latte-factor/
[4] credit card debt: http://www.fool.com/personal-finance/credit/60-second-guide-to-getting-out-of-debt.aspx?source=iccsi
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[5] credit counseling service: http://www.debthelp.com/debt-consolidation/credit-counseling.html