Need advice with credit card debts.

[kenndogg]

Know not too long ago I lost my job, it wasn't the greatest job in the world but it paid well enough to cover all my bills.
During the last few years I had a couple of credit cards which I ended up maxing out. Never really thought too much about it since I had a job. I ended up selling my beloved Alias Timmy and though it helped its not going to last into the new year. I haven't used the cards in months and I cut back on all my spending. The only thing I really spend money on is gas. I've also have been paying my college tutition out of my pocket, but I now I don't even know if I can afford to go back next spring.

What I need to know is this, I've seen some tv ads awhile back that say they can help you with credit debts. Now my question is exactly what do they do? Any reliable and reputable sites/companies that can help me? How will this affect my credit score in the future(currently I have a good credit score)? At the moment if I do go back to school this spring, chances are I'm going to have to apply for a loan. Will this have a negative impact and hurt my chances getting a federal loan for college?

Another option that crossed my mind is just not pay the monthly bills until I finish school and able to get a better job. I realize that I will ruin my credit this which would be prolly the last thing I would do and only if I'm really desperate.

Any help will be greatly appreciated.

[beam]

This is not my own advice, but I think it works the best:

Allow no more debt (duh)

Develop a good balanced budget that allows every creditor to receive as much as possible.

Pay as much as possible to the one with the highest interest first. Make minimum payments on all others. If the debt balances are approximately equal, pay the one with the lowest balance first. Once it is paid off, put all the money on the next, and so on.

Run toward your creditors, not from them.

It's difficult to negotiate with a creditor who has been ignored. Most creditors respond to a specific request that is backed by a detailed written plan. The plan should include what you owe, a copy of your budget, and a detailed plan showing exactly how much you can repay each month.

I would NOT ignore paying your bills. That is something that you will regret later in life.

[fire1811]

you could also check into a loan at the bank. Get a loan that covers all your credit card debt. You will have one payment a month and it will more than likely be a lower interest rate.

[Cameo]

the companies that you hear about on tv tend to charge a fee for thier serives and you can get the same help for free fromyour local Consumer Credit counseling servies. If you look in your phone book or contact your state represnative they can direct you to one that is in your area.
Do not let your bills go. You might think that it is better to not pay. but so much rides on your credit score now a days.. Something that you do now can have a negative effect on you 8 or so years down the road. Most big credit card companies (citi bank, bank of america, capital one, chase) will reduce your apr and forgive late fee's if you just call them and tell them the situation. Show them that you want to pay them and they will help you along the way. One other option that you have (other than taking out a debt consolidation loan) is to find a credit card that has no or a low apr on transfered balances. if you can transfer all of your current credit cards to one single card with a lower fee it will definalty halp you get back on track.
good luck.

[rkjunior303]

Consolidate your debt with a personal loan. I was in a situation such as yourself, as well. I consolidated everything to a personal loan. I paid off all my high-interest cards with the loan and then I had ONE monthly payment I had to worry about. I took out a 4 year loan to make the payments "small" but I doubled (sometimes triple) paid them on most months.

[tribalman]

my once advice, don't pay minimum payments, try and pay a bit more, even $5 more. usually the minimun payment is just barley covering the intrest payments.

[billybob_81067]

Take the advice of the guys above and also get another job! gotta have some source of income ya know.

Also if you have lots of old junk lying around you might consider selling some of it on e-bay for some extra $$$. I've done that from time to time and made pretty good money at it.

[Recon by Fire]

There was some good advice given and some bad! I have done a lot of financial investgations so I know a bit about these. My advise:

Do NOT under any circumstance use any consolidation company! NONE! You will shoot yourself in teh foot if you do! No matter what they tell you, it will ruin your credit. You will pay large fees to them that are a percentage of your "savings". The amounts that they reduce yuour debts and settle your accounts for are written off by teh companies as a loss and reported to the IRS for you as earnings! Come tax time you get a nice surprise and a tax bill to pay! You will just transfer your debt from a credit card company to the IRS while ruining your credit rating.

DO continue to make your payments on time and DO pay more than the minimum, no matter how little that is. Paying late or paying minimums will also affect your credit rating adversely.

Pay the smaller cards off first to get rid of them and then concentrate on the larger ones. A consolidation loan from a bank is good (but you probably wont get one unless you have collateral) and a loan from family/friends is better.

[BlackVCG]

It was barely mentioned previously, but I gotta say... get another job!

Besides school and being bummed out, what's stopping you from getting another one? If you don't feel like you want to work for another company right now... there should be plenty of opportunities at your school to do some work to at least get some income. Or you can use some of your talents to start doing work on the side for people. If you're good at working on computers, start helping people out with their computers for a small fee.

Either way, there's always ways to make money, you just have to apply yourself.

[Pacifist_Farmer]

There is no way that paying your minimums on credit cards can hurt your credit rating...that just doesn't make sense.

Supposedly there are like 3 of those credit consolidation companies in the country which actually do what they claim and won't hurt your credit. My wife has used one of them, all they did was cancel the cards and now she pays one monthly fee to them which equals the minimum monthly payment she had on the cards before using the company. This is a fixed amount so as her balances go down the payment stays the same, and she will pay off the cards sooner. Be aware that those companies won't even talk to you unless the interest rates are high enough and you owe quiet a lot.

Like others have said...get a job.

[Recon by Fire]

Supposedly there are like 3 of those credit consolidation companies in the country which actually do what they claim and won't hurt your credit. My wife has used one of them, all they did was cancel the cards and now she pays one monthly fee to them which equals the minimum monthly payment she had on the cards before using the company. This is a fixed amount so as her balances go down the payment stays the same, and she will pay off the cards sooner. Be aware that those companies won't even talk to you unless the interest rates are high enough and you owe quiet a lot.

Like others have said...get a job.

You and your wife are in for a surprise at the end of the year come tax time, mark my words!

[Recon by Fire]

Recon:
Do you by chance have documentation showing that making minimum monthly payments affects a credit rating/history adversely?

Ive heard it mentioned before, and have spoken with the 3 major Credit Reporting Houses(Equifax, Experian, Trans Union) which stated this is not factual. Id love something in writing to be able to call them up with and refute their advice.

QUOTE]There is no way that paying your minimums on credit cards can hurt your credit rating...that just doesn't make sense..[/QUOTE]


Sorry guys I do not have any documentation to show you, but it is true. Your FICO score is affected by how much revolving credit you use, timely payments, paying minimums, and paying more than minimum. Paying more than minimums not only shows you are reducing your revolving credit but it also is the only way you will ever eliminate your debt.

Here is an excerpt from a FICO monitoring service on one of my own credit cards:

"No payment was due
Paid less than minimum
Paid minimum
Paid more than minimum "

These categories are monitored monthly. My FICO calculator also uses these categories to show how you can alter your FICO score. So if paying more than the minimum would not affect your FICO score, then why would it be a monitired factor?

Every time you fill out a credit check it is another inquiry on your history and that also will reduce your FICO score. So don't run around filling them out when doing car shopping, etc... The more open accounts you have, even with no balances, the worse.


Also, most of these credit repair and credit consolidation agencies are actuallu subsidiries of the major bank credit cards! They will tell you they do not work for the banks, but in all actuallity, they are owned by them. Not directly though, but if you follow the corporate ownership trail, you will not like where it leads you. Some are owned by banks, some are owned by collection agencies. The smaller ones are usually independant but they are just there to abuse the consumer and make out on their ignorance.

[Kai]

The trick is to get a few different credit cards, and just use one to pay the debt off another, and so on.

[Recon by Fire]

The trick is to get a few different credit cards, and just use one to pay the debt off another, and so on.

Cascading is the most basic form of criminal thinking....very amateur stuff.

[bleachit]

Ive run into similar problems.. if you have a good credit score and have been paying your credit cards, Im surprisd you havent gotten any offers in the mail to consolidate your debt. I had 3 credit cards with total balance around $3000.. making minimum payments on all 3 I was spending between $80-$120 a month.. not quite sure the exact amount. anyway, I was offered a consolidation from another credit card, I applied and it was not approved based on my limit was not high enough on that card.. I called them up asked for a limit increase, it was approved. So instead of paying 19%, 16% and I think around 12% I am now paying about 3% apr on the balance with a minimum payment of $51 a month. I also know for a fact that because I transferred them to one card with a much lower interest rate, my beacon score went up 7 points.


I was charged somewhere around $100 or so to transfers all 3 balances, it was a percentage of the dollar amount transferred, but I have already saved more than that in interest charges.

bottom line, try to find a company that will offer you a fixed apr that is very low for the LIFE OF THE BALANCE!!!

low introductory rates are not what you want. I had the option of a 0% apr for a few months or 3% for the life of the balance... I went with the 3% because in the long run it will save me more.

also of note, if you do go this route, cut up your cards but keep your accounts that you have had the longest and that have high credit limits. From what I have been told (by a credit company) this can help your credit rating. I believe because if you have had a card for a long time in good standing it helps and also they base your rating on the % of your card that has a balance.. so if you have 30% of your limit on your card at any given time you will have a lower score than if you have only 10% of our total credit limit.... at least thats how I think it works.

edit: during this time I also consolidated some school loans, but the credit cards will have a greater negative impact on your score than school loans because of the type they are.