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Credit Card Debt


Credit card debt comprises the largest portion of most people’s unsecured debts. The irony of credit cards is that the more you need them, the higher your interest rate will probably be and the less affordable they will be. Your interest rates are higher as your credit is worse.


Most credit cards are “unsecured,” which means that, unlike a mortgage or a car loan, there is no collateral that can be repossessed if you do not pay them. Do not refinance your credit cards into “secured” loans, such as by refinancing your house to pay for them. This would pay off the credit card companies at the expense of giving your mortgage lender a harmful way to collect (foreclosure) if you don’t pay.


To keep your credit score high, experts generally recommend that you use no more than 30% of your available credit limit.


It is always important to review your budget for areas where you can cut back, such as unnecessary cable television services, cell phone services, going out to eat or for coffees, or other discretionary spending.


The best thing to do with credit cards is to pay them off every month. If you cannot do this, then it is best to pay down your highest-rate credit card first, even if it has the highest balance. Sometimes, just by calling your credit card company you can get them to lower your rates. If you have already fallen behind, however, the account may have already been referred to collections.


Once a credit card debt goes into collections, be aware of your rights against harassment by debt collectors and your rights under the Fair Debt Collection Practices Act. If you are behind on your credit card debt, Culik Law can help you settle the debt for a reduced amount. If you are being sued in court for a delinquent credit card debt, there are strategies Culik Law can use to help you with to deal with a debt collection lawsuit.