Introduction
Credit Cards – Can be very helpful, allow you to get things you normally would not purchase because you do not have enough cash. So, those special items you want to get, like a new computer, a digital camera or camcorder, clothes, jewelry, appliances, furniture and much, much, more are at your fingertips. In short, anything you want to get, you can get with a credit card. Some people buy cars and other major purchases. BUT, there is one thing credit card companies have that a lot of people don’t have —– the money to back up the purchase. A lot of people buy an item on credit but have no idea on how they are going to pay for it, but they think they have to have it. Others make purchases and have not worried about the purchases because they have a job to pay for it—until lately.
Paying off credit cards on time gives you a good credit rating, which allows you to get even more credit. The higher your credit rating, the better your interest rate is on major purchases financed, such as cars, homes, or other high priced item. Many employers look at your credit rating which tells them if you are dependable. Do you keep your word? A poor credit rating is what causes A LOT of the stress, both mental and physical, bankruptcies, divorces, and other major hardships on individuals and families. In fact, issues concerning financial issues is one of the top 5 causes families have hardships.
The “secret” of having a credit card:
Before going any further, go to Google, or any search engine you use, and look up “Modern Money Mechanics” and read it. You will learn how banks operate; learn how banks make money out of thin air. Learn how banks make money off your signature without your knowledge. The same thing occurs with credit cards. Most people DO NOT KNOW THIS. If an individual tries this, it is called fraud and deceit. Yet, banks and credit card companies do this every day. It is a total rip off to the consumer, yet the banks and credit card companies are getting away with it, because the public is unaware of their “back-room” operations. The only way this will change is when the American People have had enough and write a letters to force their congressmen to correct these inappropriate operations.
THE HARDSHIPS OF CREDIT CARDS:
When you get a credit card, you feel you have power. As stupid as it sounds, many people with credit cards fall into “the trap” that they can buy what they want now and pay it back later without any problem. So, you get a credit card with a $5000 credit limit—WOW! Now, that’s with just one credit card. What if you have 3, 7, 10, or 17 like I did? Just think of the things you’ve wanted BUT HAVEN’T BEEN ABLE TO BUY because you did not have the money available right now. But now, with this credit card — you can buy what you want, and just pay it back later. RIGHT? —- WRONG! —-That’s exactly what the banks and other companies who issue you a credit card want you to think. Go out and buy what you want — charge it and pay us back later — DON’T FALL FOR IT, BECAUSE YOU WILL REGRET IT! WHY? What happens when you or your spouse lose that good paying job or they cut your salary?
Credit Card companies do not want customers to spend a lot and pay the full balance off every month because they make very little money on that consumer. Why? Because every month you have an “open balance” that you owe on that credit card, even if it is $1.00! That credit card company is going to add interest on top of the remaining balance. Plus, if you pay only the minimum amount due, it will take you longer to pay that credit card off. The longer it takes you to pay off the balance means that the total amount you pay will greatly exceed the original charge because of interest. So, the real question is — is it worth it? Do you really need it, especially if you can’t pay the full balance off at the end of the month?
When you go to a store to purchase something, how many times do you see someone writing a check or paying for it in full, with cash? You don’t, unless it is small item, normally less than $25 in cost. However, in today’s economy, you see a lot of people using credit cards just to buy food. People, who use credit because of a lack of discretionary money, can suddenly lose their job or a second income they depended on to make the credit card payments. Now, those bills that were easy to pay are now a nightmare. WHY? Because when you fall behind on payments those nice credit card companies turn on you like a vulture after prey ready to die. WHY? Because you did not pay the minimum due, the credit card company will add a late fee, in fact, some companies today charge more than $39! Plus, if they add the late fee + interest, your balance may go over the card limit. When this happens, the card company adds the late fee + interest + an over limit fee + the minimum due. The problem is every month you avoid dealing with this credit issue—-it gets worse. You get letters demanding payments, phone calls at home, at work, on your cell phone and more. Soon that simple credit card that you thought was great suddenly turns your life into a living hell. Sometimes it seems there is no way out — I know this to be true becaue it happened to me years ago, just like it has happened to millions of people over the last few years.
OVER DUE and DROWNING IN DEBT
In today’s economy, MANY PEOPLE are having problems making ends meet because of the unemployment rate today, in fact MILLIONS of families are having problems making ends meet. So, if this happens to you, what do you do? Where do you go? There are 4 things you must do:
- Admit you have a problem. If credit cards got you into this problem, don’t use them…put them aside.
- Make a monthly budget. Buy “Budget” Form to help you make your budget, include everything. Do not leave anything out.
- Write letters to every creditor – SPECIAL NOTE — be 100% honest. (See Credit Letters)
- Wait for answers from the creditors and keep a file on every answer in the event they want to go to court. WHY? Because the letters are proof you have tried to work with the creditors to do debt relief or do a debt settlement.
Debt Relief
There are companies that offer “Debt Relief” counseling, however you can do the work yourself and save thousands of dollars. It takes time…it cannot be accomplished overnight. With the process of debt relief, many creditors or businesses will require you give up your credit cards. There are other processes you can follow to help lower your monthly payments. These tips and form letters are available to assist you in achieving debt reduction.
Debt Settlement
It is not easy, but it can be accomplished to help you and your creditor. In short, you and your creditor negotiate to settle the debt at a reduced amount. Once the amount has been agreed upon, the amount will be paid off within a short, fixed period of time. Once paid off as agreed, the creditor will have it noted on your credit report, “Account paid off as agreed” or “Account paid off at reduced amount.” This normally happens with third party collectors or when the account is in default. This shows that the defaulted account has been settled.
When you do debt settlement, you must send letters and keep records to confirm any agreements. If they try to change the agreement or do not keep their part of the agreement, this gives you the ammunition you need to sue that creditor, which is your right.
In short, there are many ways to work with creditors and much of it can be done by you. This can save you hundreds, if not thousands, of dollars in expenses. However, if you feel uncomfortable about doing it yourself or have had major problems trying to accomplish it, there are attorneys who work in consumer law or bankruptcy, which is the last option you want.
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