Credit card holders have many options for debt management. The cardholder may have fallen behind on payments or may just want to save money with a lower interest rate. These credit consolidation tips will help get credit card debt under control.
Manage Debt and Reduce Interest Rates by Paying on Time
The most basic rule of debt management is to pay at least the minimum amount on credit cards on time. There is no room for error when paying credit card bills. Triple check the numbers when paying bills online to be sure that at least the minimum payment is made. Mail payments at least a week before they are due.
Credit card companies are not as forgiving of late payments as a utility company might be. A payment that is just one day late may not effect the consumer’s credit score, but it could make his or her interest rate jump significantly. In an emergency, the fees involved in making a payment over the phone on the payment due date should be accepted rather than let the payment go even one day late.
Negotiate Directly With Creditors to Reduce Interest Rates
Creditors are often willing to reduce interest rates, especially if the cardholder has a good track record with the creditor. All the consumer has to do is call and ask. When calling to negotiate, point out the number of years with the creditor and a history of on time payments.
Join a Cardholder’s Debt Management Program
This solution is a good option whether or not the cardholder is in good standing with the creditor. Call and inform the creditor of financial hardships which may affect ability to make the minimum payment on time. Rather than let the account go into collections, the creditor may enroll the account into it’s own debt management program, which will lower interest rates and a reduce the minimum monthly payment.
Generally, the cardholder must agree to stop using the card while in the program. The drawback of this solution is that most programs offered by creditors are only available for a limited time, usually six months to one year.
Enroll in a Private Non-Profit Credit Consolidation Program
Finding a legitimate debt management program can be useful for improving finances. The firm will negotiate with creditors to get very reasonable interest rates. Then debt will be consolidated into one monthly payment, which the company will disperse amongst the creditors. Credit will not be damaged and interest rates will remain low as long as the cardholder pays on time each month.
This solution contains several drawbacks. Most consolidation companies require clients to pay off debt in four to six years. Therefore, monthly payments may be higher than the creditor’s current minimum payment. The cardholder will not be allowed to incur any other credit card debt while in the program.
Consumers often have a difficult time with debt management due to high interest rates on credit cards. High interest rates can be avoided by paying on time. Cardholders can also work with creditors to negotiate lower interest rates or enroll in a private credit consolidation program to manage debt.