Credit card debt is becoming a serious problem in the United States. The average household has at least one credit card, with the average debt being $9,000. There are several signs you may be heading for credit card trouble, including using them to pay for basic living expenses and only paying the minimum payment each month.
Stop Using Your Cards
Resist the temptation to take out another credit card to pay off your debt, and stop using the cards you do own. Consider making strict lifestyle changes such as not eating out or minimize your socializing. For larger debt, you may need to consider getting rid of your car if you cannot afford to run it or selling your home and moving to a smaller, cheaper place.
Make High Interest Cards a Priority
You should begin paying your highest interest rate cards first. Do not close the cards; instead concentrate on reducing and clearing the balance for each one. This is the best option for your credit rating too. Once your outstanding debt begins to fall, your credit rating will begin to improve. After a couple of months, contact your credit card company, and negotiate a lower rate.
Loans
Asking relatives or friends for a loan may be embarrassing, but it is also the least expensive way to get out of debt. Ensure you draw up an agreement before you take any money; this should avoid potential arguments later on. A home equity loan, if you qualify, will reduce your interest rate considerably; however, your home is at risk of foreclosure if you do not meet the required payments.
Negotiate a Repayment Plan
Contact your credit card company, and ask if it will consider arranging a reasonable repayment schedule for you. It may show more understanding than you would think—especially if this is the first time you have experienced financial difficulty. If your debt is extreme, inform your creditors that this is your last resort before filing for bankruptcy. Many creditors will choose to work with you rather than suffer a total loss.
Seek Help
You should consider requesting the services of a professional credit counselor. He or she will negotiate with your credit card companies on your behalf to make a suitable repayment plan. You should also be honest with your family and friends who will offer you the necessary support and understanding.
