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Monday, February 23, 2009

Big Credit Card Debt Can Kill Your Credit Score

By Jim Bransby

Getting your first credit card is exciting and easy. All you need to do is open up the pre-filled out application and sign your name onto it. Then you toss it in the mail and just like that you are in. Into one of the world's worst debt causers today, which seems to be expanding immensely.

Then you get the card, and it's easy to use. It's just as easy as your debit card, except it doesn't hit your bank account ... yet. It hits your credit card debt, which is a killer. It's very easy to keep spending and spending, and it's very easy to lose track of how much you have spent.

Before you know it, you have huge credit card debt, the card company doesn't care, and you're stuck making minimum payments at 20% for the next 30 years. You've gotten used to spending, so you quickly find you are living beyond your means, and collection calls begin. There HAS to be a way out!

They way out is to repair your past mistakes. Get rid of the credit card debt. Call the card company and ask them to work out a payment plan with you. Most of the time they are interested in getting their money back just like you are, so you can probably strike a deal for a reduced interest rate in exchange for a larger payment.

So you hang up the phone feeling relieved; what next? Take your scissors and go to work on the credit card. Keep the number in readable shape or write it down in case you have to verify your account later on. Afterwards, hide it somewhere you will not be bothered to look for it and rest assured your spending days on it are over.

If you made the mistake of overspending on multiple cards or through multiple companies, your nightmare may not be on its way to fixing yet. Agencies will often hound you with calls until they can get some money out of you. So treat them like human beings and confidently tell them you are paying off debts with another company as the debt was larger.

Whatever you do, do not give them the details of your other agreements. If they have the conversation recorded you could be in legal trouble, not just financial trouble. Be willing to work out a plan but make sure they understand you need to be in charge of the details as you have to pay more than one bill.

After all these arrangements, there might be another bill that you forgot about. If you cannot pay, don't lie. Apologize to them. Let them know that you have made arrangements with however many other places, and your income is fixed, but you will be happy to call them monthly to update them on your status. Stay in touch so they know your intentions, and you may find the collectors working on YOUR terms!

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