7 Useful Tips for Managing Your Credit Cards

Managing debt can be overwhelming for many of us, but it doesn’t need to be. Getting good advice on just how to manage your debt safely and securely is invaluable. You are going to want to enroll in a debt management plan that fits your current income level and financial commitment to recovery. To help you achieve that goal, we compiled this list of seven useful tips for managing your credit card debt.

1. Try to pay down some of your debt and improve your credit score. This can be a tall order for many working families and individuals who are absolutely strapped, and who are watching every penny. Still, if you can free up some funds or liquidity and at least show that you are making good faith payments — even relatively small amounts — your credit score won’t continue to be adversely affected, and the credit card companies should honor such good faith shows of willingness to pay your debt.

2. Create a household budget and trim the fat. In the interest of freeing up some funds that may be going to extraneous or low-priority “indulgences,” such as entertainment or other non-essential expenses, create a household budget and go over it with your spouse and/or other family members. Discuss what fat may be trimmed from your expenses, and which could then go to paying off your credit card debt. Implement these changes (hopefully with unanimity) with a resolve to stick to them, no matter how unpopular it may be to toss out unnecessary indulgences. This will give you some financial breathing room and good strides toward better debt management.

3. Set a firm plan and timeline when setting a strict budget for yourself and family. When implementing your household budget, you will want to set a timeline, e.g. six months, one year, etc., and check yourself and your budgetary sticktoitiveness along the way. Depending on how urgent your credit problems are, you will want to check your budget strictures that much more frequently. Keep a calendar and/or some kind of journal or chart, and map your debits and credits along your set timeline. This will help you keep a firm record and also help you stick to your budget cuts.

4. Check the Ability to Pay rules through your credit card company. The Credit Card Accountability, Responsibility, and Disclosure Act (CARD) of 2009 set new rules, including the “Ability to Pay” provision, which forces card issuers to reasonably consider the card holders ability to make the account payments. Credit card companies must also consider only the individual card holder’s income and not household income, when determining credit lines and anticipated financial wherewithal. Provisos within the CARD Act make creditors consider repayment ability and establish policies and procedures based on:

• The consumer’s income or assets
• Card holder’s current debt obligations
• The ratio of debt obligations to income
• The ratio of debt obligations to assets
• The income left over after paying their debt obligations

5. Choose credit cards that do not require mandatory binding arbitration for dispute settlement. Chances are, if you’re in deep enough credit card debt, you have considered some kind of debt dispute. Many consumers cite the exorbitant interest rates charged by creditors as being “usury,” which is prohibited, ostensibly, by constitutional law. But, many credit card companies have mandatory binding arbitration agreements in their terms of use, which mean that in the event of a debt dispute involving legal action, the card holder waives the right to sue or join class action lawsuits. Choosing a credit card company that does not force its customers to resolve debt disputes only through their own third-party arbitration (most arbitration settlements not being to the consumer’s benefit), will help you be freer in credit card debt settlement, resolution, and disputation.

6. Weigh settlement amounts against a guaranteed lower credit score. It may sound like the perfect answer to your credit card debt problems, but settling for an amount less than what is owed may likely still leave you with significant damage to your credit score. Make sure you have a debt settlement specialist go over your options here, as you could be on the hook for not only the debt settlement, lower credit score anyway (the card companies will still report the debt to credit scoring companies as “not paid in full”), but the IRS will ding you for unpaid taxes on the forgiven debt, if it exceeds $600.

7. Find a good credit counseling agency. Make sure that the credit counseling agency you choose to help you settle your outstanding debt is a non-profit 501 (c) (3), is certified and accredited by an agency such as the Council on Accreditation (COA), and has viable counseling and debt management plans. Many will charge up-front fees, unethically, give you a few options, and end up just making money off of your debt woes. Federation to Protect provides responsible options to ensure customers’ trust — literally! Fees are minimal and charged only after a viable debt management plan has been laid out for you. Debt relief seekers are provided protection from unfair practices, privacy violations, false advertising, and identity theft as part of comprehensive debt management and relief. Contact Federation to Protect through a secure online email form today for your debt relief solution!*

*This article provides broad and general guidelines and does not constitute professional or legal advice. You should not use this article as a substitute for your own judgment, and you should consult professional advisers before making any advertising, tax, legal, financial planning or investment decisions.