High interest rates are common on many credit cards; you can end up paying two and three times the original amount in interest on a purchase. If you have a high interest rate on your credit card, try getting it lowered.
Many credit cards have high interest rates, and some interest rates continue to climb the further behind you fall in making payments. If you are behind on your payments for any reason, a lower interest rate may help you catch up. Call the company and tell them of your hardship. Request the interest rate be lowered. Tell them you are considering transferring your balance, or getting a personal loan from your bank to pay off the credit card and you will be closing your account with them if they cannot accommodate you.
If you have been a good customer and pay your bills on time, call the credit card company and explain to them that you have been a good customer, you enjoy having their card, but you have received better offers from other credit card companies. You would like them to lower your interest rate or you plan on switching cards. Your credit card company wants your business; they may lower your rate to keep you as a customer.
If this does not work, you are in no way obligated to switch cards, transfer balances, or look for a personal loan. This is simply something you can try to get a lower interest rate on your credit card. These tactics will not work on all credit card companies, but it is worth a few minutes of your time!
Some creditors are willing to work with you if you have experienced a hardship and will be unable to make your payments in full each month. These hardships can be loosing your job, injury, or any other crises. If your creditor is local, for example your bank, make an appointment with the person who gave you the loan, they may be able to work with you.
If your creditor is a credit card company, call them and explain the hardship, inquire if there is anything they can do to assist you so that you can make your payments. Some possibilities would be lowering the interest rate, lowering the minimum monthly payment, or dropping late fees to allow more of your payment to be designated to the balance. If they are willing to work with you, request some form of proof from the company of the assistance they will offer and follow up the phone conversation with a letter to the company stating who you spoke with, the conclusion you came to, and that you expect them to follow through.
In extreme cases where it is not possible for a family to make their mortgage payments they should contact their loan servicer and seek help with a HUD approved counseling agency. For more information go to www.hud.gov or call 1-800- 569-4287 to find the HUD approved counseling agency nearest you.
Other Options for Managing Debt
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Work an extra job temporarily. All income from a second employer should be designated to the debt.
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Make double or triple payments. This can be very effective on reducing debts with high interest rates or late fees. Call the company and inquire if you make extra payments, will they be applied to the principle? Some companies will apply extra payments to the interest owed, or to the finance charges. Some companies will not apply extra payments to the principle unless the late fees are paid in full. In this case it may be wise to save the extra payments until they equal the late fees or the remainder of the balance, then you can pay the bill in full.
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Use any assets to lower the balance. It may be time to take inventory of your house. Is there anything that you are not using that could be sold? There may even be enough to have a garage sale. Get the whole family to participate. Take advantage of bonuses at work, or tax returns, use these forms of extra income to pay down your debt.
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Involve your family in making a plan to spend less. What areas could be cut back? Add up how much you are spending for entertainment or eating out. Is it possible to cut this in half, or find a cheaper way of doing the activity? If you rent 3 movies every weekend at $3 a movie, this is $9 dollars a week, $36 a month and $432 a year.
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Any Combination of the above items.
Note: It is possible to borrow against a retirement account such as a 401(k). There is a penalty for borrowing money from such accounts. You may decide it is not worth that cost. Your employer can give you specific information concerning your 401(k) plan. There are some employers that will allow you to borrow against your 401(k), but require that you repay the account directly from your pay check. This money may accumulate a minimal amount of interest in your behalf.