Debt Resolution in the New Year

Have more debt than you care to handle? Want to do something about it, but not sure how? The Consumer Credit Counseling Service deals with people daily who have had enough. We have some tips that might help you put it all behind you.

Dealing With Debt

Admit it--The first step to dealing with your debt is admitting you're in deep.

Budget--After admitting your problem, you can make a budget and find places to cut back. First, look at your day-to-day bills. Sites like lowermybills.com allow you to compare services and fees, to make sure you're paying the least amount possible.

One step at a time--If you owe money on several credit cards or small loans, tackle them one at a time, concentrating on eliminating the debt one card at a time. However, don't neglect the payments you must make on each loan--be sure to pay at least the minimum each month, on time.

Look at loans--If you owe money on a credit card, car or house, you can look at the interest rate you're paying and possibly transfer to a lower one, saving quite a bit of money in the long run.

These days it's easy to rack up hundreds of dollars in interest charges on a single credit card. There are offers out there for low rates -- but they don't all last. Now, some companies are experimenting with offers for low rates -- for life. However, there are some catches.

Lifetime Deal

A Balancing Act
The card issuers require you to make a balance transfer, and it's that transfer amount that the low interest rate applies to…nothing else. SO, if you make other purchases, those purchases will typically be charged a higher interest rate. Any payments you make will first be applied to the balance with the low interest rate, leaving the new charges to be paid off last-at the higher rate of interest.

Keep Charging
Discover card is offering balance transfers at zero percent -- if you agree to keep charging. Two purchases must be made each month. However, the purchase can be minimal since there is no mandatory purchase amount.

Don't Be Late
If you make even one late payment, your rate can go up, most likely into the teens. The low interest rate offer will essentially end.

Fine Print
Be sure to read the fine print on the offer you receive. It will spell out any other requirements you face in order to keep the low interest rate in effect.

When it comes to transferring your debt from card to card, you should be very careful. Dennis K. Howell, from the Consumer Credit Counseling Service, says you should take a few things into consideration before signing off on a transfer.

What to Consider

How long will the rate last?

Before opening a new line of credit, Howell says it's important to find out how long the new rate will last.

What are the fees?

In addition to paying close attention to the interest rate, it's important to find out what kind of fees will be involved. Will you have to pay a fee to transfer your balances? Or, will you have to pay over the limit or late fees?

Too much credit?

If you open another credit card, will you have too many lines of credit? "If you are transferring balances from one card to another, it would be important to close the account on the previous card", says Howell. That's because having too much debt or too many cards can hurt your credit rating.

Are You a Credit Card Addict?

Here are some warning signs you can look out for. Ask yourself these questions:

Are you unclear about your financial situation?

Do you know your bank account balances, monthly expenses, how much you owe creditors, loan interest rates, fees or fines?

Do you only pay the minimum on your credit card bills each month?

If you think paying the minimum makes financial sense, think again. Holding a large balance could send you into a vicious cycle of debt. For example, if you charged a new computer that cost $2,500 on your credit card that carries a 15% interest rate and only paid the minimum payment each month, it would take you 24 years to pay off that balance and cost you a whopping $6,000 in interest! But, if you paid $25 extra each month, you would save almost $2,600 in interest and cut 18 1/2 years off that repayment time.

Do you borrow money and items?

Do you frequently ask for small loans from friends and loved ones? Or, do you ask to borrow things and never return them?

Do you have poor saving habits?

Are you prepared for retirement or tax season? Do you have a "live for today, don't worry about tomorrow" attitude?

Are you a compulsive shopper?

Another warning sign is impulse shopping. Is the mall your haven when you're having a bad day? Is it hard for you to pass up a good deal?

Do you have trouble meeting financial obligations?

Is it an effort to pay your rent or mortgage each month? Or, is your car payment notoriously late?

Do you have a tendency to live on the edge?

If you're living paycheck to paycheck, you could be a credit card addict. Do you use one credit card to pay off another? Or, do you write checks hoping that money will appear to cover them?

If you want to compare card rates, simply click on www.cardratings.com for the low-down on low rates.

Did You Know?

If your credit card balance is $8,000, and you make the minimum monthly payment at 18% interest, it will take you 25 years, 7 months to pay the debt off. You will pay $15,432 in interest charges, (almost twice the balance), bringing your total to $23,432.

NEWAY, a non-profit debt counseling company

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