Saving, Managing Debt, and Budgeting

Credit Card Debt

What steps can I take to minimize my credit card and other debts?

According to experts at the Federal Trade Commission (FTC), the first step to liberating yourself from credit card debt is to get a realistic picture of your income and your expenses. You may divide your expenses into two categories: fixed expenses, meaning those expenses that don’t really change from month to month, such as rent or mortgages; and variable expenses, items that may change from time to time, such as utilities, food, and entertainment. If you have received notices from creditors, you should contact them directly and ask to arrange for a way to reduce your monthly payment to a reasonable level. Stop using your credit cards so that you may begin to improve your financial picture. The FTC notes that your debt can be secured or unsecured. When debt is secured, ownership is not conveyed until all payments are made, such as your house or car. If you stop making payments, you may lose that asset. When debt is unsecured, it is granted with no ties to any particular asset, such as credit cards, signature loans, and medical bills. But most lenders are willing to work with you to create a more reasonable payment plan, so you should speak with your creditor when you have a problem. Creditors—especially credit card companies—may change the terms of your agreement and reduce your annual percentage rate to a more reasonable level.



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