Consumer Debt Management As A Preventive Action
Consumer debt management plays a significant role in helping consumers handle their debts. It covers credit counselling, debt negotiation, debt consolidation, debt management plan, debt settlement, bankruptcy and other methods that can help to cope with debt. Often, consumers entertain the idea of managing credit card debt only when everything has gotten out of hand. Before a pile of debts overwhelm you and while your credit record is still intact, be at the helm of your financial affairs while you still can to protect your credit score, avoid incessant collection calls and eliminate the need to pay for debt relief services. The following tips may help you do this.
Simple Consumer Debt Management Advice
Use credit cards only for purchases which you can pay for in cash. If your credit card balance is quite large already, stop using your card until you can pay off your debt.
Pay more than the minimum monthly due, or better yet, pay your balance in full on or before the due date to avoid incurring finance charges. Typically, the minimum amount due is sufficient only to pay for monthly interest. To prevent your balance from ballooning, always make it a point to pay more than the minimum amount due.
Settle your monthly bills on time. Paying only the minimum amount is forgivable, but going overdue will not only cost your penalty charges, it will also dent your credit rating.
Relocate balance to credit accounts with lower interest rates. If you maintain a number of credit cards, you can also transfer the balance from other accounts to one that has a lower interest rate. If you only have one or two cards, and you happen to find another credit card company offering a lower interest rate or even 0% interest, you can open a credit account with them and transfer your balance. However, you must realize that these 0% or low interest rates are often offered only for a certain period. Take note of when the special rate expires and how much would the regular rate be. It would be great if you can pay off the entire balance before the interest rate shoots up. But if you cannot afford to do so, start looking for another creditor offering a low interest rate and transfer again your balance to that credit card company before the promotional rate lapses.