Credit card debt can lead to more serious problems. Unfortunately, thousands of cardholders fall into bad credit each year for different reasons such as poor spending habits and credit card mismanagement.
If you find yourself in a similar situation, what are your options?
Some may immediately think about cancelling their credit cards as a way to escape debt. But closing an account with an existing balance will not solve the problem. In fact, it can inflict more damage to your credit rating.
What happens when you cancel a card without paying your balance? Unpaid charges will still be reflected in your credit report and will remain there for up to seven years. Such a record can instantly send a negative impression to future creditors who may view your report.
Listed below are the steps that you can do to manage credit card debt before closing your account.
Don’t charge new purchases.
Concentrate on paying off your remaining charges. As you strive to pay your debts, avoid charging new expenses to any of your credit cards.
Plan your repayment.
Allocate your monthly income according to your obligations. Debt repayment should be your first priority so instead of just submitting the minimum payment each month, try to pay down as much as you can from your balances, if it’s not possible to pay all your charges at once.
Negotiate with your credit card company.
If you are truly struggling in keeping up with your bills, speak with your issuer and try to negotiate the terms of repayment. For instance, you may request your issuer to waive the penalty fees to reduce burden or you may ask for a lower interest rate.
When negotiating with your credit card company, be sure to discuss matters with the person who can make decisions on your behalf such as the manager or the supervisor. Politely explain your current financial situation and why it has become difficult for you to keep up with your repayment. Let your issuer know that you are doing your best to do your duties as a borrower and to protect your personal credit as well. You may be surprised to see that your issuer can make adjustments to make repayment easier on your part.
Seek help from a credit counseling agency.
Situations vary from one person to another so if you do not know how to resolve your debt problem, don’t be afraid to seek help a reliable credit counseling agency. Visit the NFCC’s (National Foundation for Credit Counseling) (NFCC.org) website for a list of accredited agencies near your location.
