Life can be hard, and for many people a time comes when they just cannot keep up with their credit card debts. The choice then becomes whether to make smaller payments or quit altogether for a short time.
With proper planning, making smaller payments, even less than your current minimum is a much better idea than not paying at all. Not paying leads to added fees, higher interest rates on the debt, and a negative mark on your credit report. Don’t rely on bankruptcy to get you out of it – that one just became a lot more difficult. The new bankruptcy laws make it so that more people will have to work on paying back their debts, and then you still have a bankruptcy on your record.
Instead, be honest with the credit card company. Tell them that you’re having troubles and see what arrangements can be made. Most companies will work with you so that they get their money back without a fight or risking losing it all to those who can still wipe out their debts with a bankruptcy.
Don’t skip the step of telling them, however! You might get charged a fee for making a payment under the minimum, and I can almost guarantee you your interest rate will go up if it was not already at the maximum. A little negotiation can keep your interest rates and payments at a more reasonable level.
These may not be your only options. If you own your home, it may be time to look at a home equity loan. You’ll most likely get a lower interest rate too.
Don’t own your home? Have any free time at all? It might be time to consider a part time job. No, it’s not fun working multiple jobs, but we’re talking about getting out of debt here, and it’s time to be practical.
Speaking of practical, how does your budget look? Anything in there you could live without? Cable? Cell phone? Is the cell phone on the best plan if you can’t live without it (be sure your reason for this is solid, not just so you can call friends from anywhere)? How often do you really need to eat out anyhow?
It’s easy to get into a credit crunch, but not so easy to get out. A little effort can go a long way toward easing the crunch and getting you back in good financial shape. And that can save you a great deal of money in the long run.
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