As if it’s not bad enough that having too much credit card debt can hurt your credit score, trying to actually be thrifty when shopping could result in your credit card company trying to change the terms of your account. Some credit card firms have been paying close attention to where consumers shop to determine their financial risk. But a credit card reform law signed by President Barack Obama is designed to give consumers more protection from sudden changes to their credit card terms. Read the rest of this entry »
The Wall Street Journal reports that banks are tightening credit requirements for credit card applications, and cite examples of well established customers being asked to fax copies of bank statements for verifying their net worth. In the past, consumers were deluged with offers of high credit lines and encouraged to transfer other credit card balances to new cards. Not anymore. Unless you have excellent credit, debt management using balance transfers may not be an option.
DIY Debt Consolidation
You may be able to put yourself on a debt management plan by tracking all credit card balances, minimum payments and finance charges (APR-annual percentage rate) paid for each account. Once you’ve documented this information decide how you want to approach your debt:
Pay off small balances first to get them out of the way
Take on the highest APR balance first by paying as much as you can toward it each month while making minimum payments on the rest of your accounts. When the highest APR balance is paid off, move to the next highest, and repeat this system until all of your credit cards are paid off.
Debt Management: Bumps in the Road
Put away the plastic: In order for any debt management plan to work, you’ll need to commit to not using credit cards. Lock them in a safe, put them in a safe deposit box, or freeze them in a bucket of ice; do whatever you need to do to stop pulling out the plastic for everything from groceries to flat screen TV’s.
Don’t close accounts: Closing credit card accounts can reduce your credit score, which is partly based on the amount of credit available to you. If you feel you must close some accounts, close recently opened accounts. The age of your accounts is another factor in keeping a good credit score, so that old department store card from ten years ago is worth keeping even if you don’t use it often.
Emergencies: Debt help professionals say that saving for emergencies is an essential part of debt management; you can ruin your debt repayment plan if unplanned expenses cause you to run up your credit card balances. Ask your employer about direct deposit savings; you may be able to have a portion of your pay deposited to a savings account.
Will power: Going on a spending binge or otherwise using your credit cards can sabotage your debt management plan. If you do “slip,” don’t dwell on it. Adjust your debt management plan and move forward.
If you’re having problems with debt management, debt help is available through credit counseling services that can assist by negotiating a debt consolidation plan with your creditors.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.