DIY Network

SPONSOR LINKS

How to Get Out of Credit Card Debt

Find out how to get out of credit card debt.

From "Home Made Easy"
episode DHME-103

(Continued from page 1)

More and more people are getting nailed by late fees: the fees are much higher than they used to be--as much as $100 per violation and a lot of companies automatically raise your interest rate even if you're late only once.
Bad credit will hurt your chances of buying a home or getting a loan. Creditors will also hunt you down with annoying phone calls. You could face legal action, repossession of your car or foreclosure on your house. They can even freeze your bank account. The new bankruptcy laws make it even tougher on you, even if you declare bankruptcy and lose everything you still have to pay the credit card companies. By carrying big balances on credit cards, many people feel that it is hopeless to try and pay them off so their balances continue to rise. Remember that every bit you pay down makes it easier to pay the rest down.

When making purchases--pay cash. Good old fashioned cash that you earned is a sure fire way to avoid credit card debts. For larger purchases or situations where you are not comfortable carrying large amounts of cash, use a debit card that draws directly from your account or carry a charge card that requires you to pay the full balance every month. Check with your bank to see if they have lower interest rates. Many experts suggest freezing your credit card, literally putting the card into your freezer in a container with water and only using it for emergencies.
You should also understand everything about how your credit card works and what everything means that appears on the bills. Know all the fees, how the company charges you, what your interest rate is. Knowing the card and understanding what appears on the bill will change the way you use it.
Most importantly, remember that if you are purchasing goods before you have earned them, you are in effect borrowing from the future to pay for the present. In essence, it is the exact opposite of saving or investing and instead of earning money, you are paying interest.