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June 24, 2017
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Break the Bad Credit Cycle - 5 Simple Tips

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For many in the 25-to-35 age group, credit-card debt can seem insurmountable. But don't despair. This Five for the Money offers some strategies to help ease the burden.

1. Assess the Situation
Before you can start cutting your debt, you need to itemize all your financial obligations to understand what's going where. Once people start doing that, it's like being on a diet and counting calories

2. Play Hardball
You have a bargaining chip: Your creditors want their money back, and they may be more flexible than you think. Call your credit-card company before it starts sending you late-payment notices. Explain what you can afford, and see if you can negotiate a modified payment plan. A lot of times they're willing to work with you, especially if you explain that it's temporary.

You can sometimes persuade credit-card companies to waive their annual fees, simply by calling them and threatening to close your account.

3. Get Good Information
If you decide you can't manage your credit-card burden alone, be careful about where you get advice. For a list of organizations approved by the government, click here. Your local state attorney general, Better Business Bureau, or consumer-protection agency might also have information about resources in your neighborhood. University credit unions are another possible resource.

4. Lose the Expensive Debt
Keep paying your minimums on all your cards, but focus your buying power on getting rid of one creditor at a time, starting with the card that's charging you the highest rates.

5. Knuckle Down
Kristy Wilson succeeded in transferring higher interest rate credit debt to more affordable cards while she and her husband were grappling with their $30,000 burden. They knew that the introductory zero-percent rate on one of their cards only lasted for six months, so they kept close track of its expiration date. As a result, they managed to save hundreds of dollars without getting suckered into paying higher charges.

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