Archive for January, 2010
January 28th, 2010 | 
Author: I owe on 3 credit cards. One is starting to fall behind on the payments as its too much to pay. Which route is the way to go? Debt consolidation or contacting creditors & explaining that I was living beyond my means & now I am having trouble paying.
On the one card I’m having trouble with (Chase), my monthly balance is $299 but I can afford to pay $180 a month to them. I’ve heard horror stories where people get the WORST treatment when they try to set up payment plans with credit card companies. Do most companies decline an offer of a payment arrangement? I can get back to more payments in January or February but now is hard.
Credit card debt consolidation counselors are experts with a good knowledge of debt management, budgeting and behavioral patterns of credit card holders. These services are vital for those struggling to manage their credit card debts. Also called credit counseling or debt counseling the credit card debt consolidation counseling brings immediate relief to a credit card holder.
A person seeking credit counseling can get it from two types of organizations. The professional or commercial organizations, and the non-profit organizations. As depicted by its name or categorization, the commercial organizations charge money for their credit counseling sessions and consolidation help on the other hand the non-profit organizations offer free of charge services. Just because the non-profit organizations are free, it doesn’t undermine their quality of service. The persons associated with such organizations are thorough experts and have lived the trauma of being under credit card debt themselves and hence bring their vital experience to the credit card holder.
When a person approaches a credit counseling agency, the first thing it will do is to take stock of the situation and get various facts about the credit card debt. The credit counseling agency collects data about the income, expenditure and spending habits. It will guide the credit card holder about budgeting benefits and try to inculcate good financial habits. Read more from: http://www.credit-card-gallery.com/article/353,Credit_card_debt_consolidation_and_credit_counseling_great_tools_to_get_rid_of_credit_card_debt
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I have a good credit score, last time I checked about 6 months ago it was about 720-730. Recently I have acquired a big credit card debt, about $9,000 on one credit card (with a limit of $10,000) and about $3,000 on another one (with a limit of $5,000) for many different personal reasons. After the whole spending money ordeal was over, I was left with all this debt on my credit cards. Since then, I have cut back on all unnecessary spending, besides the obvious things like food, gas, etc. I have never been late on payments and have never been over the credit limit. I Also try to pay an extra hundred bucks on top of the minimum payment due when I can. Are there any good ideas on how to consolidate these two credit card debts and help me out with all this? Thanks!
First of all, consolidating the debts wont really change anything. In fact may adversely affect your credit score.
You need to do the following:
1. Evaluate you interest rates. If you are paying more than 12%, then think about finding a new credit source to consolidate. With your credit score you are probably getting teaser rate offers in the mail. (Beware of a teaser rate that rests after 6 months, as what you save wont be that much) Look for a credit card that will allow you transfer the balances for a long period at a low rate. Many cards offer rates of 5.99 or less for up to 2 years, but also check if there is a transfer fee. This can be as much as 4%)
2. If you find a good card and rate to transfer, then transfer as much as you can from the higher of the two rates you currently have. If you able to transfer all of 3000 debt, do not cancel that card. (Just make sure you dont use it) Having a zero balance and available credit actually improves your credit score.
3. Make a plan. Figure out how long it will take to pay off each card by taking the minimum payment amount (principal only, not interest) and divide into the amount owed. Lets say on the 10,000 card the principal payment is $277, that means it will take 3 years to pay off that card.
4. If both cards have the same rate of interest, but different pyoff dates, put all your extra monthly payment towards the card with the highest % to the credit line (in this case the 9,000 card as that is at 90% of your limit, vs the 3,000 which is at 60% of your limit). The lower the % owed the better for your credit score.
Finally, do not use the cards. Pay cash for everything. (This is very important if you end up consolidating to a lower interest card. Those cards will apply all of your payments to the low interest balance first, and start accruing a high rate on the new purchases. that will go on until the original amount is paid off).
you always here about debt consolidaters, could save 40 to 60 percent on the interest is that a con job or is that for real?
Most of the debt consolidator’s offer Home Equity Loans. This will give you a better interest rate than what credit cards offer, but if you fail to pay the debt consolidators they get to take your house. The best choice with credit cards though is usually to negotiate a lower interest rate, or float the balance to a new card…and close the old one. I recently worked over one of my credit card companies and got them to drop the interest to 2%.
If I let my cards slip for a while I don’t know how much they’ve hurt my credit. I need credit card debt consolidation, will they accept me if my credit cards have been beating up my credit a little in the last month or 2?
Please do not consolidate. It is not free, they will lower your payments by increasing the length of time until you are debt free, and you will take a hit on your credit score. Or they negotiate your debt down after telling you not to pay for awhile adding another hit to your credit score. There is a better way.
A. Have a garage sale and sell anything that you no longer need or want.
B.Get a temporary part time job, if you have one, get another.
Here is a plan that can help you. If you work the plan, the plan will work for you:
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.
2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.
3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment
Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment
Debt #1: paid off
Debt #2: paid off
Debt #3:Minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.
5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.
5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.
5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.
You can do it and it isn’t as hard as you think. Just follow the plan.
i have my credit messed up by family members and i’m trying to pay all this off.trying to find out the best way.
I agree with vanessa. Best thing to do is get these debts paid off using your own money.
If possible, get a second job to get more income coming in.
My husband and I just got married in September. We both have some debt and both have fair or poor credit. We do not own a home, we rent.
What we want to do is consolidate our debt into one loan and just make one payment on it every month. How can we do this but not have to pay fees and with our "not so perfect" credit?
It usually isn’t a good idea to "borrow" to get out of debt. Try to find a way to manage your spending and see if you can make extra payments to your debts.
You can make an appointment with Consumer Credit Counselors, they can be helpful, (but they only told me I should get a part time job because I needed more income to meet my expenses)
You can also go to Oprah’s web site and look for The Debt Diet. (this was a godsend to me) There are tips & worksheets and sort of like lessons on money, debt, etc.
Good luck.
okay i asked a question lastnight about my credit. and some of you gave me some aswome answers. but, i am still a little confused. here is my question…..
okay yes i know i am young, but i am admitting that i screwed up. i have bad credit….. and i am afraid if i dont do something about it soon, my whole future will be ruined. i am 8 months pregnant, and so i am taking leave soon and probably not going to go back for a while. i have already gotten my credit card payed off. i have called around to debt consolidators and they say i have to have at least 10,000 dollars of debt… i have less than 2000….. is there any way i can get this figured out soon and easily?
i cant apply for another credit card i will be turned down. i dont know what agencies my debts are through. is there any way i can figure this out too? most of them are already in collections.
thank you to those who did answer, i just dont understand.
I had answered the last question that you had about fixing your credit. I’m here to answer some more questions for you again.
You should gather reports from all 3 agencies if you haven’t already, if you haven’t then you can obtain copies of your credit report by going to
http://www.annualcreditreport.com
Once you get these reports, then you not only can see what has went to collections, but also how much and the contact information of the collectors as well.
You mentioned that you can’t apply for another credit card. I had mentioned in another answer about secured credit cards. These are the easiest credit cards to get, but for right now, you should focus on getting your debts figured out.
Hopefully, this will help
Good Luck!
Horrible Credit Part 2?
okay i asked a question lastnight about my credit. and some of you gave me some aswome answers. but, i am still a little confused. here is my question…..
okay yes i know i am young, but i am admitting that i screwed up. i have bad credit….. and i am afraid if i dont do something about it soon, my whole future will be ruined. i am 8 months pregnant, and so i am taking leave soon and probably not going to go back for a while. i have already gotten my credit card payed off. i have called around to debt consolidators and they say i have to have at least 10,000 dollars of debt… i have less than 2000….. is there any way i can get this figured out soon and easily?
i cant apply for another credit card i will be turned down. i dont know what agencies my debts are through. is there any way i can figure this out too? most of them are already in collections.
thank you to those who did answer, i just dont understand.
I had answered the last question that you had about fixing your credit. I’m here to answer some more questions for you again.
You should gather reports from all 3 agencies if you haven’t already, if you haven’t then you can obtain copies of your credit report by going to
http://www.annualcreditreport.com
Once you get these reports, then you not only can see what has went to collections, but also how much and the contact information of the collectors as well.
You mentioned that you can’t apply for another credit card. I had mentioned in another answer about secured credit cards. These are the easiest credit cards to get, but for right now, you should focus on getting your debts figured out.
Hopefully, this will help
Good Luck!
Should I go to a debt consolidation company or work it out amongst myself?
This calculator may help you. Enter your debts and it will help you calculate the payment for a debt consolidation loan and it will compare that to using a debt elimination strategy so you can see which is best in your situation.
http://debt.bizcalcs.com/Calculator.asp?Calc=Debt-Consolidation
This calculator uses the debt elimination strategy used in the one above, but gives you a monthly payment schedule using your debts and how much you can pay.
http://debt.bizcalcs.com/Calculator.asp?Calc=Debt-Elimination
Good luck eliminating your debt!
is one better than the other? or is obtaining a loan from a credit card company to consolade your debt better? (i’d appreciate any info)
credit counseling is where they negotiate with your creditors and lower the interest rate and they take out 1 payment every month from your bank account. Consolidating is putting all the credit cards into 1 loan and making 1 payment every month til they are paid off. Personally, it depends on how much interest you are paying on the credit cards compared to the loan. You might be making out better with the loan, or you might make out better with credit counseling.