Credit card debt is a problem for people of all ages. Experts say cash-strapped college students often live on credit. Meanwhile, young couples use credit cards for miscellaneous wedding and honeymoon expenses. Retired people often use credit cards to supplement their Social Security income. With debt counseling, you learn about different ways to get out of credit card debt including debt consolidation. According to a recent article by U.S.A. Today, the average family in American owes about $15,000 in credit card debt. Paying off credit card debt once it surpasses your yearly income is especially difficult and feels impossible.
Consolidating debt the right way
Some people open a low-interest rate credit card to consolidate their credit card debt. In many cases, people with low credit scores can’t even get a low-interest credit card. Instead sign up for a debt management program that lets you pay off debt with a specific monthly plan. Your creditors get on board. Most consumers love the fact that they don’t have to negotiate a deal because credit counselors work behind the scenes to help you. If you have credit card debt that totals half or all of your yearly income, a debt management plan is ideal. Your creditors work with the income you have. They often lower the interest you owe and forgive late fees.
Making the minimum payment, for now
Continue to make the minimum payments on your credit card until you get everything set with a debt management plan. Another possibility with debt counseling is that you develop a budget and strategy to pay more than the minimum on some credit cards. The point of paying at least the minimum is to keep your credit score at a healthy level. With debt counseling, you learn all the tricks and tips for improving your score over time.
Asking for a better interest rate
Experts say if you have a credit score of 710 or higher, you can often ask creditors for a better interest rate. Of course, most people struggling with credit card debt also struggle with a low score. Receiving debt counseling gives you an edge because you find out about debt consolidation for a reduced interest rate on credit card debt. Boosting your score is key to better personal finances. Once you reach the 700 or 800 mark, it’s easier to get mortgages, car loans and lower interest rates.
Making two minimum payments a month
Another tip is to make two minimum payments a month on a particular credit card. By doing that, you reduce the balance owed and pay off the debt quicker. Making two minimum payments is a good holding strategy until you can pay off your debt completely with a debt management plan. If you get paid twice a month, you can often budget to make credit card payments with each paycheck.
At Christian Credit Counselors, we help consumers battling credit card debt and desiring a more positive financial future. For more tips on how to quickly improve your finances with debt counseling, please contact us.