Use non-profit credit counseling services if you need a professional to negotiate a repayment plan with creditor:

• National Foundation for Credit Counseling. Call 1-800-388-2227 for nearest Consumer Credit Counseling Service.
  
  
• InCharge Institute of America and Its Family of Financial Wellness Companies. Call 1-888-734-6205 for InCharge Debt Solutions for English speaking and 1-800-565-7525 for Spanish speaking.
  
  
• Myvesta for educational programs

Cure strategies

Use but do not abuse. Think. Clarify priorities. Control yourself. Be careful not to take on more debt than you can handle. Borrow as an investment to increase value and assets (i.e. college, house, etc.) but not to increase temporary or harmful consumption. Develop credit literacy and know the credit process. Know the rules and policies of your credit card and store charge cards. For example, over-limit fees can range from $20 to $29 dollars each month until balance is reduced to less than the limit. The average amount for a late fee is $29.00.

Then, control credit or it will control you. Credit can enhance for immediate pleasure but destroy and enslave for years.

Deprogram yourself. Reject the buying frenzy dictated by the media. Resist the pressure to rely on credit. Remember that credit is debt, not supplementary income. You cannot borrow yourself out of debt. The enemy is the pressure to rely on credit and then consolidate all debts.

Redefine the good life in your own way. You don't have to spend money to have fun or to increase your self-worth.

Protect your future financial freedom.

Do not pay just the minimum and create a mountain of debt -This saves thousands of dollars over time. A typical minimum monthly payment is 90% interest and 10% principal. For example, by paying the minimum (2%) each month on a card with an 18 percent APR, paying off a $2,000 purchase will take more than 19 years. You will pay more than $3,800 in interest, so a $2,000 purchase will end up costing you more than $5,800!

Bankcard Holders of America gave this illustration with 18% interest and payment of 2% of balance:

And this assumes you don't charge anything else during that time, or the interest and actual cost will be even higher.

In Cathy's comic strip, she wanted to buy a sweater because it was on sale - 30% off. Explained was the cost when the sweater used the 18% credit card (Department stores charge more). If you have $2000 on the credit card with a $40 annual fee and pay just the 2% minimum, it will take 24 years to pay off and you'll incur $4,396.50 in interest on top of the $2000 charge. And $960 in fees over 24 years.

Paying a regular amount above the minimum will cut your time and cost of pay-off significantly. For example, paying an extra $20 per month on the above purchase will cut your payment time to about 6 years and you will save over $3,000 in interest.

A survey by the Public Interest Research Group asked students how long it would take to pay off a $1000 credit card debt at an 18% APR, if you only paid the minimum balance due. Using a generous 3% minimum payment (most credit cards require less), only 20% of all students guessed the correct answer - six years. In addition to the $1000 paid off, the student would also pay $559 in interest. A $2500 debt could take 34 years to pay off with total payments of over $10,000, including $7500 in interest.

Compare fees for credit

You may pay a variety of fees to use credit cards. Annual fees are often charged for the use of the card. Late fees (sometimes applied to payment only one day late) can cost nearly $30. Over limit fees are applied if you charge more than your pre-approved amount. Transaction fees as well as a higher interest rate may be applied when you take out a cash advance.

Calculate interest

A number of methods are used to calculate interest, including basing the interest on the average daily balance or on the outstanding balance at closing. Know the method of calculating interest to choose your best payment method. A $1000 loan with 18% interest over three years with regular payments, as in a car loan and debts, using the add-on interest method, would amount to about half of the principal in interest or about $500.

An example of average daily balance method: A $600 payment was made on the 15th day of a 30 day billing period. Interest is charged on the average amount outstanding. Since $800 was outstanding for 15 days and $200 for 15 days, average daily balance was $500. One month interest is $7.50, at 1-1/2 percent monthly interest rate (18% APR). The sooner a payment is sent the lower the average daily balance and therefore the lower the finance charges.

The difficulty in handling credit payments today: Billing periods for different companies are different, grace periods are different and getting shorter, and delinquency and late fees are different and changing. Rates for cash advances are different than those of purchases. Fees are charged for using credit cards at different ATM locations. When a payment is late, the attractive initial rate becomes much higher from then on.

Identify the grace period

A grace period is the time during which no interest is charged for new purchases. Grace periods, which vary by company, usually don't apply when you carry a balance on your card. In general, grace periods are getting shorter.

Credit Section I / Section II / Section III Section IV Advance to Housing, Vehicles & Equipment Return to Management

Family - Government & Community - Education & Skills - Employment - Management - Credit - Housing, Vehicles & Equipment - Insurance - Savings - Investment - Financial Planning
Ability to Adjust

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