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Credit Card Debt

January 31, 2023

5 Tips For Beating Credit Card Debt
LETS FACE IT: Credit card debt has become a super-sized problem for many Americans.
The average household now owes more than $9,300 on their credit cards, according to
CardWeb.com, a credit information website. Ten years ago, that figure was $4,300. Debt
like that isn't easily wiped away. But with some determination, that can be achieved.

Here are five tips to get you started:


1. Confront the problem

Now is not the time for denial: Take a good, hard look at how much you owe and how much
interest you're paying. "It's fairly common that consumers don't know where they stand," says
credit expert Gerri Detweiler. author of the Ultimate Credit Handbook." "Its’ scary to sit down and
tally up the numbers."

Once you've faced facts, devise a plan of attack. Find ways to reduce spending and by all
means, stop using your credit cards.

2. Transfer high interest balances to lower interest cards

These days the average credit card interest rate is 14.09%, according to Bankrate.com, while
those with poor credit may be paying as much as 29% or higher. But some credit card issuers still
market 0% APR introductory offer on balance transfers, says Scott Bilker. Author of “Talk Your
Way Out of Credit Card Debt.” And many of these offers waive balance transfer fees. which can
be as high as $75 or 3% of the balance transferred. Of course, if your credit history is in
shambles, you're not likely to qualify for these deals.

Before applying, make sure you read the fine print. "The credit card companies wouldn’t offer
those 0% deals unless they made money off it: Detweiler says. So be sure to stay on top of your
cards, paying off your balances or transferring them to another low-rate card before the
introductory offer ends.

3. Call your lenders

If those 0% offers aren't exactly flooding your mailbox, try asking your lender to lower your
rate. No. it probably won't drop to zero percent, but it might very well drop a few percentage
points. According to a US PIRG study, 56% of consumers who called their credit card company
were able to lower their APR within five minutes. Those who were successful reduced their APR from an
average of 16% to 10.5%.

If the customer-service representative refuses to lower you rate. Bilker says. ask to speak lo
a supervisor and threaten to transfer your balance to another credit card.

4. Tackle the highest-interest card first

Once you've done all you can to lower your interest rates, figure out which debts to tackle
First. Financial planners often recommend paying off the card with the lowest balance first so you
can see fast results. That's a fine plan. but if you really want to pay your debt off as quickly as
possible, focus on the card with the highest interest rate and pay the minimums on the rest,
recommends Detweiler.

5. Beware debt-management scams

If your credit debt is spiraling out of control, you may benefit from the services of a
credit-management agency. These are nonprofit organizations that help consumers pay off
overwhelming debts by lowering their interest rates or placing them in so-called Debt
Management Plans (DMPs). Through these plans, the consumer sends a check to the agency,
which then disburses it to creditors. However, be wary of some of these firms.

Red flags include pushing you into a Debt Management Plan without carefully reviewing your
financial situation and outlining alternative solutions. You should also be wary of any counselor
that pressures you to sign a contract right away, one that charges excessive fees, such as 10%
of your current monthly payments.

To make sure you are dealing with a reputable credit counselor, check its record with the
Better Business Bureau and call your State Attorney General's office to review complaints.

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