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Credit Card Minimum Monthly
Payments Are Going Up!
The government’s Office of the
Comptroller of the Currency (OCC) gave guidelines to all major credit
card companies that they had to increase the minimum balance payable on
their credit cards. Companies were given three years to increase their
rates gradually. However, no one did anything for three years and now,
with the deadline running out in mid 2006, most credit card companies
have suddenly increased their rates for credit card minimum balance
payments. So what does this mean for those who are under credit card
debt?
It means that people need to
be more aware about their credit card debt and try and get out of debt
more seriously than ever before. With minimum payments increasing
drastically, your credit card debt will continue to rise if not paid off
as soon as possible.
Tips For Debt Management
To help you do just that, here
are some credit card debt reduction tips:
- Cut up all your credit
cards (barring one for emergencies) immediately. This way you will
not use your credit cards and will thus not keep increasing your
outstanding balances.
- Keep track of all your
expenses on a weekly basis and try and cut down all those costs that
are not absolutely essential.
- Budget some minimum
amount each week that will go towards debt reduction. Once you
budget this amount, make sure you send the check to your credit card
company each week. Don’t wait till the end of the month. This way
you can lower your interest payments significantly.
- Look around for offers
where you can transfer your credit card balance to another loan with
a lower interest rate. You may also be able to find zero interest
balance transfer offers, where you won’t have to pay any interest
for the first 8-12 months.
- Make your payments on
time, even if it is only the minimum balance due. Late payments
have a nasty way of increasing your interest payments and you will
also have to bear increasingly high late payment fees. Even ONE
late payment can cause your credit score to drop by 30-100 points!
- Keep credit card accounts
you have paid off open, just do not use them (assuming the annual
fees are not outrageous)! Your credit score
reflects total available credit vs. outstanding balances. The more
your available unused credit, the better.
If you are unable to handle
your credit card debt management on your own, you should think about
getting debt reduction assistance or some kind of debt help. A debt
reduction counselor will be able to work with you and create a payment
plan which will help you to get rid of your credit card debt in the
least time possible. Just do your homework here – make sure you are not
going with someone who will make your credit situation worse.
You can also use our free
personal budgeting software to help set aside money to pay off your
credit card debt. The sooner you are free of debt, the sooner you can
regain control of your financial life.
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