When Your Molehill Becomes a Mountain
It can happen slowly and then one day you look at the small bit of debt that you thought was inconsequential and realize that it has turned into a tower. It can also start will a slow increase that builds as quickly as a snowball rolling downhill. The bottom line is that it is far more common than you might imagine to suddenly find yourself overwhelmed by debt, particularly the type of debt that is so easy to accumulate on your credit cards.
One late credit card payment could be the first sign that you are heading toward disaster. It may not seem like such a big deal at first. You simply pay a late fee, with the amount depending on the credit card issuer. The amount of the late fee may be based on your card balance. That’s good news if you carry a low balance, but it’s bad news if you have big balances. Late fees generally range from $15 to $35. The unexpected part comes when you suddenly discover that because of as little as one late payment, your interest rate is suddenly raised, especially if your card offered you a special lower “teaser” rate for an initial period of time. Even worse, once the late payment is reported to the credit bureaus, you may even find that your other credit cards may raise your interest rates as well. Suddenly that simple snowball has grown into a debt bomb.
It is always your safest choice to pay your credit card bills on time every month.
If you have difficulty remembering the due date, then try to pay the bill as soon as it arrives, even if you can only make the minimum payment. If you at least pay the minimum payment on time, you can guard against late fees and unexpected hikes in your APR. You can always send a bigger payment later on or next month when you have more cash available.
If you are past a simple late payment or two, you may need to look into getting more serious help. Eventually, snowballing credit card debt can reach a number that is simply beyond your means to pay. If the companies pass the debt on to collection bureaus, you may find yourself being pressured to the point where you even feel harassed at home or even at work, which could put your job in jeopardy.
The first step is to stop any phone calls at work. The Fair Debt Collection Practices Act requires creditors to stop calls to your workplace once you notify them that your employer does not allow these calls. You simply need to notify the creditor(s) in writing, and send the letter by certified mail. Be sure to keep a copy for your records. If any of the creditors then continue to violate the FDCPA, they can be fined.
If you have fallen behind on your credit card payments or feel that your debt has gotten out of control, look into debt consolidation first to see if you can find a way to either lower your overall interest rate or extend your term for repaying your debt in order to make your make the monthly payment more affordable. Balance transfers are an option worth considering, as is taking out a home equity loan or cashing out if you are already looking into refinancing, but be cautious. These actions also carry the potential to make your overall debt situation worse instead of better.