Debt Survival Tips - How To Deal with Struggling Credit Card Companies and Interest Rate Hikes

[Mar 6, 2009.]

 

The Effects of a Down Economy on Your Debts
As unemployment rates rise across the nation, credit card companies continue to struggle with defaulting borrowers. In a recent MSNBC report, credit card companies are expected to lose nearly 100 billion dollars in write-offs--a substantial increase compared to the 41 billion dollar write-off in 2008.Unfortunately, last year's significant losses and this year's severe expected losses means more increases to consumer's credit card interest rates.

As most can expect, the latest interest rate hikes have been initiated to help cover the recent write offs, and generate a certain amount of increased revenue. But some financial analysts are also pointing out that this is another safety precaution for credit card companies to limit their exposure to bad debt and defaulting borrowers.

The bottom line, however, is that all individuals with a balance on their credit cards should stay on high alert. Pay attention to your monthly statements and any additional notices you may receive from your credit card company. According to the report, a survey of major credit card corporations pointed out that 37 percent of these companies have already had to raise their interest rates. Raising interest rates has also been a tough call for banks and credit companies as it can push struggling consumers over the edge and even closer to default.

Survival Tip - Consider Debt Consolidation Loans and Services
Although debt reduction and elimination are the most preferred methods, credit card debt consolidation is often the first step for many struggling individuals. Some consumers can get so overwhelmed with all their debts that some simply lose hope. Fortunately, through debt consolidation, individuals can consolidate a number of debts into a single account with one lender and one monthly payment.  In addition, if you are currently facing an interest rate hike, debt consolidation can help to reduce your overall monthly payments and make it more manageable to pay off your debts.

But, individuals should make sure to avoid the common mistake of consolidating their existing debt and taking out more debt in replacement. One thing to keep in mind is that debt consolidation fails to cure bad budgeting and spending habits. However, if one is serious about debt relief, debt consolidation is a great way to simplify the task of juggling different accounts and battling these credit card interest rate hikes.

In addition to credit card debt consolidation, some services may also offer to negotiate your debts on your behalf, while some may provide you with counseling to help manage your debt in general.

[MSNBC - Credit Card Companies's $100 Billion Loss]

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.