How-T-Play-the-"B"-Card

There is a progression of alternatives most people go through in trying to find ways to drive that credit card debt problem down and get it under control. When you are trying to get out of credit card debt, sometimes desperate times call for desperate measures. At first just trying to pay them off month to month seems reasonable. But as the debts mount up, more creative measures are often tried.

It is when you take that next step of leveraging debt against debt that you know things are getting out of control. This is when you start paying off one credit card with another. Now there are reasons to do this such as moving debt from a high interest account to another that is doing business more favorably for you. But you have to watch those “deals” because often there are transfer fees or other hidden charges to sneak up on you. And if the lower rate is a “limited time offer”, the advantage of the lower interest rate for a few months may not be worth the extra fees. And if that new credit card carrier then jacks your fees up higher than they were on the old creditor, you are worse off than before.

When the credit card debt then begins to become a real problem the next level starts to take advantage of your assets. You can take out a second mortgage and get a pretty good rate that is controlled because that is what they called a “secured loan” which means you are using the equity of your house as collateral to fight the credit card debt. But these kinds of loans are risky because if you did default on them, you could lose your home.

When the credit card debt begins to get serious again, even despite all these serious measures you have taken, you can get pretty panicky. And you can get resentful because there is no question that the credit card companies seem to do all they can to keep you trapped in this debt as long as they can. And why shouldn’t they after all? They make a lot of money off of your credit card debt. And they don’t have to do anything to keep it rolling in.

This is why when it comes to making a decision between just starting to default on the credit card debt, it might be time to pull out the stops and go after the credit card companies to put a stop to the escalating bill. But you can put a stop to it by calling them directly and not being afraid to play the ultimate card, the “B” card – bankruptcy.

Now, declaring bankruptcy has become more difficult since the current administration in charge of our government made it harder for regular folks like you and I to use this tool to stop the constant escalation of our credit debt. But it still is possible to use bankruptcy and if you do, the credit card companies could lose all of that money. And they know it too. Now you don’t want to threaten bankruptcy unless it really is a possibility for you. But if it is and you call the credit card companies and let them know this is your next step, you suddenly have all kinds of leverage with them.

Once the credit card companies know you are serous about going that route, if you tell them you would like to work out a deal to pay off some of the debt you owe, they may be very open to reducing your debt by half or more. And if you can get that kind of deal from every credit card company you owe and you can get them to lower your interest rate to make your ability to pay more reasonable, you might be able to avoid the bankruptcy entirely. And if that is the outcome, you did a good job of showing the “B” card but never having to play it.

Only-Get-a-Premium-Interest-Rate

The challenge of tackling a massive credit card debt can seem almost impossible at times. When you look at the many bills rushing in each month and then you start going through that credit card bill, the idea of actually starting to pay that bill down can be overwhelming. And part of the reason that uphill battle to win over debt seems so hard is those almost ridiculously high interest rates credit card companies are allowed to charge.

If you have a credit card debt in the thousands of dollars and that interest rate can get above 15%, that is going to mean that a large portion of your monthly payment is going to go toward the interest. And what that means is that your balance will go down slowly which is very discouraging especially if you are also using the credit card so your balance continues to go up and up and up.

How often have you looked at the average interest rate that the credit card companies are charging you and thought, “I sure wish there was some way I could but that interest rate in half or less”? If you could just get that interest rate down under 10% or even better, that step alone would help you put more of the payment money you pay out each month toward reducing the debt. And if that rate could be locked in so it isn’t constantly being jacked up by the credit card company, then you have a real path toward paying off what you owe once and for all.

There may be a way to actually get a credit card rate you can live with from the credit cards services you already are working with. It goes back to that old advice that your mom or dad might have given that goes – “You don’t know until you ask.” That’s right it is very likely that if you call the credit card company and explain to them the situation, they might have the resources to negotiate a rate with you that you can live with and offer you the same services a credit consolidation company would offer.

It’s good to take a moment and look at the world through the eyes of the credit card company. They are in business to keep good customers who pay their bills. For credit card company, the worst kind of customer is one who is constantly late on their payments or doesn’t pay at all so they have to go through the expense of nagging those customers for the money. And customers who have the resources to dump them because their rates are too high are also a big threat to their livelihood because they depend on you needing them and being willing to pay those interest rates and fees.

So rather than see you dump them or take your debt elsewhere like to a credit consolation service or a second mortgage, its better business for the credit card company to cut your rate and continue to make some money off of your debt. Competition is just as intense for the good customers in the credit card world as it is in any other business. So if you pay your bills and are the kind of customer these companies like, you have a bit of leverage with them that you may not have known you had.

Make sure when you call the credit card company to renegotiate your rate that you talk to someone who can actually change things. And bring some clout with you. Be prepared to cancel your credit cards or move your debt to another card or credit service. If you let that credit card company know you are unhappy because of the rate, they will have some kind of program to keep your business. They aren’t going to tell you about it but its there. And if you are persistent and want it bad enough, you can get the credit card companies to play ball your way and give you a premium interest rate you can live with.

Time-to-Get-Help

Do you ever wonder if there should be a 12 step program for people who have a problem with credit card debt? The idea might not be as ridiculous as it sounds. The 12 step program is one of the most successful therapy programs there is for helping people with addictions. And in a lot of ways, our love of credit and of buying things using our credit cards amounts to an addiction.

And like people who are suffering with an addiction, many times the biggest step forward is when you recognize that you have a problem. Too often when someone has the beginnings of a credit card debt problem, there is a sense of ambivalence and “just let it go” because after all “everybody does it.” And when you have a problem that threatens to become a huge problem, that is no time to be lazy and decide to just let it continue because you think everybody does it.

That attitude of “oh well” is exactly why the credit card companies are making record profits. If we all would get mad because they are enslaving our family budgets, we would rise up and throw them off and the world would change dramatically for us. But we can’t fix the world. But you can fix our own world and start at home, with your own credit card “addiction” and maybe even use some of the principles of 12 step programs to get started.

Most professionals who work with people needing 12 step programs will tell you that the biggest obstacle is getting the troubled person to know they are in trouble. We all live in a bubble where we tell ourselves and each other that “everything will be all right.” 12 step programs use tough love to tell the people who come there that everything will NOT be all right unless they take steps to change their addictions because their addictions will destroy their lives.

Well folks, we might need some tough love when it comes to us not taking action to fix our credit card debt problem before it destroys our lives. We have to find a way to get over this idea that we should just endure credit card debt and get motivated to do the hard work to dig ourselves out before the task becomes insurmountable. In a lot of ways the problem is pride. We may suspect we have a credit card debt problem but we don’t want to tell someone else we have one. We are proud and we want others to think we always have it together.

That pride says “just take care of this yourself” and it will keep you from talking about the problem with your spouse, your family and then even going to someone like a credit card consolidation company to find out how to get this problem under control. The big moment when an “addict” becomes a recovering addict is when he or she recognizes that the problem is there, that it is huge, that it could destroy their lives and that it is time to seek help.

Maybe that time has come for you. Maybe its time to not let your pride be so stubborn that you wont turn and seek help from people who know how to help you get this problem under control. So let this little discussion be your “intervention” to give you a slap in the face that the faster you let that pride go and seek some help, the faster the credit card debt problem will go away and you will be back on a solid financial footing once again. And once you get this “monkey off your back”, you will never want to become enslaved to credit card debt again.

Move-Your-Debt-to-a-"Better-Place"

Balance transfers are one of the big methods that are common used to try to get some control over an out of control credit card debt. While many balance transfer offers you get from credit card companies in the mail are not a great deal, some of them can really help if you are just trying to get the debt you are trying to keep up with under control. And getting that debt to a credit home where the interest rate is not only reasonable but not constantly changing is a big goal of making balance transfers.

There are some general guidelines you can use to pick which balance transfers to even consider in the first lace for moving your debt. It is worth your while to be a wise consumer and chose a credit agency carefully because it is a competitive market and, as with anything else, there are good guys and bad guys out there. Some guidelines to take into consideration are…

• If you can do business with a company that you already have accounts with, that’s better. Not only do you have a history of how they treat their customers, it will not affect your credit score to just use an account you already have established.
• When moving your debt to an offer for a lower interest rate, make it is not an offer with an expiration date. Some very low interest rate offers are only for a few months which really don’t do you that much good. Better take 3-4% for the life of the loan than zero percent for three months.
• Keep your eyes open for transfer fees. These hidden charges can take all of the value out of a seemingly good offer. If they say there are no transfer charges, make sure that’s the truth. Read all of the fine print of any offer whether it’s from a new credit source or someone you have worked with for a while.
• Only respond to offers you get in writing. Stay away from phone solicitors or email offers. There are more scams than respectable offers done this way.

Also keep an eye on the credit ceilings of the offers you are getting. If the offer is to use an existing credit account, you should know how much credit they can offer you and how close you are to using that credit up. But it is of no value to you to go through the trouble of arranging a balance transfer to try to capture a lower interest rate only to find that they could only accommodate a small amount of the needed funds.

The other kind of balance transfer other than just moving debt from one credit card company to another is to move funds to a secured loan. A second mortgage is a secured loan because you are putting up your home equity as collateral. These types of loans are easier to get because you have something to put forward for it but you are taking a risk because of the security you are putting up.

Use the same sense of good common sense and examining the creditors when you choose a company to take out a secured loan. Two things you can over look that can come back to haunt you are early cancellation fees and variable interest rates. If you are putting up your home, you deserve to lock in the interest rate. And when you look at the final paperwork, look for those early pay off fees. If everything doesn’t look just right, don’t be afraid to get up and walk out. There are plenty of credit companies out there to deal with and you can find one who will do business fairly and honestly with you. You just have to have the patience to keep looking.

Beware-Of-Stupid-Credit-Card-Tricks

Have you seen the ongoing skit on the David Letterman Show called “Stupid Pet Tricks”. It was an aptly named bit because the things people teach their pets to do are truly silly. Letterman did so well with that skit, he followed it up with another series called “Stupid People Tricks.” Well, when it comes to the dozens of credit card offers that you get in your mailbox every week, you might think that some of these credit card companies would like to be on the next series called “Stupid Credit Card Tricks”.

These promotions that you get for credit cards seem to be playing on just about every tactic they can find to get you to take out yet one more credit card. You would think that the fact that credit card debt is a virtual epidemic in this country would let the credit card companies know that its time to get on the side of the consumer to learn responsible use of credit. Instead they do all they can to get you to have more, not less, credit cards and use them as much as you can.

We need to be smart consumers because as much as credit card companies try to make credit cards seem fun and happy and like big toys in your wallet, they are not toys. We should never forget that a credit card is nothing more than a way for the credit company to extend to you dozens of small unsecured loans that they will create credit payments on the fly to enforce through your credit card bill that will include high interest rates and additional fees as they see fit.

This is not to say that having a credit card is not a good thing. Good credit is one of the real assets any responsible adult will use to help make life easier and to make the necessary purchases in life. And more and more credit is becoming the currency of choice replacing cash and checks as the preferred method for paying for gas, at restaurants and any more even at retail outlets and grocery stores.

While the spread of credit as actual currency is a fact of life for us, it is also a major move by the credit card companies to take over the economy and to make you even more dependent on them. So the best defense is to take charge of your credit card life and make sure that you are the boss of your credit cards, not the other way around.

The stupid credit card tricks can be really fun to look at and sometimes enticing. They will appeal to your sense of school pride by giving you a credit card in your college school colors. You can get credit cards that give donations to save the environment, help the poor or create a college fund for your kids. There are all kinds of premiums, cash back concepts, frequent flier miles and gifts and toys that credit card companies will fork over just to lure you into getting more credit cards and using them a lot.

To put it bluntly, you and I need to learn not to be suckers for these deals. We can laugh at the stupid tricks they try to use. But if a credit card company is going to try to trick you into getting a card or using one, they are not doing business honestly with you.

You want a credit card company that deals straight with you. They should offer fair rates that don’t change at the drop of a hat. They should sustain a reasonable credit limit and not always be jacking it up to try to get you to buy more stuff on the card. And they should have good customer service and be ready to renegotiate your relationship with them so you are getting good value from their service, not just paying for a bunch of toys and frills that do you no good whatsoever.

By keeping in mind what a credit card company actually does and that credit cards are mature adult tools, not games or toys, we can keep in perspective how to use our credit cards and how to keep from abusing credit which will lead to the nightmare of credit card debt.