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Credit card debt: first steps to get on top of it

See the full number, call the card company, pick a payoff order and avoid debt relief traps.

23 items · 5 sections · money, personal-finance, budget

Start this checklist

See the whole picture (5)

  • List each card: balance, interest rate and minimum payment
  • Add up what you owe in total
  • Work out what you can pay each month after essentials
  • Stop adding new spending to the cards
  • Remove saved cards from shopping apps

Keep things from getting worse (3)

  • Pay at least the minimum on every cardMissed payments can hurt your credit score. After 4-6 missed months the debt may be charged off, and you still owe it.
  • Set payment reminders or auto-pay for the minimum
  • Avoid cash advances and payday loans

Call the card company (5)

  • Use the number on your card or statement
  • Ask for a lower interest rate
  • Offer a payment plan you can really afford
  • Write down who you spoke to and what was agreed
  • Ask for the agreement in writing and keep it until it is paid off

Pick a payoff order (4)

  • Highest rate first saves the most interest
  • Smallest balance first can feel easier to keep going
  • Put all your extra money on one card, minimums on the rest
  • Check your progress on the same day each month

Get help, and avoid traps (6)

  • Look for free or low-cost credit counsellingCredit unions, universities and US Cooperative Extension offices can point you to it. Ask what it costs.
  • Get every fee and promise in writing before you sign
  • Walk away if a company charges before it settles anythingIn the US, debt settlement companies cannot collect fees before they settle your debts.
  • Walk away if they guarantee all your debts will be settled
  • Be wary if they tell you to stop talking to your creditorsStopping payments can damage your credit and bring collection calls or lawsuits.
  • Search the company name with "complaint" and "review"

Written from consumer.ftc.gov

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