HOUSTON -- Credit card counseling experts agree that the first thing to do if you are trying to get rid of your credit card debt is to stop using the cards.? Some even advise freezing them in a small block of ice and keeping them, literally, in the deep freeze.
Another smart move, according to?counselors at Money Management International, is to use their services.? They are a?non-profit group that charges a fee based on your income to negotiate more favorable terms with credit card companies.? Spokesperson Tanisha Warner said the fee does not go above $40.
Warner admits the professional credit counselors don't do anything consumers couldn't do on their own in terms of interacting with the credit card companies.? But there is an advantage in?letting the "pros" who do it every day handle the problem.? She also said Money Mangement International helps clients come up with a budget that allows better allocations of their money for paying down debt -- something people would likely have done on their own before getting into trouble, if they could have.
Warner said companies like hers have a proven track record of?getting credit card companies to lower interest rates and?freeze them at the lower rate.
"Sometimes we can get zero interest for a while," said Warner.?
The credit counseling agency can also get the card companies to apply more of the payment to the principal first instead of? to the interest, Warner said.? When the card companies apply more of the payments to the interest, it allows the debt to linger for years and causes the consumer to repay the original debt many times over.
Counselors say?one of the easiest budgets for most people to cut is their food budget.
"You?don't have to eat what you've been eating," said Warner. "You don't have to spend the same type of money. Going out to eat, cut that out if you have to. Instead of buying your lunch every day, really make a bigger dinner and bring your lunch the next day."
That could save enough money to make two monthly credit card payments, Warner said.
Counselors help clients come up with?a budget plan, and then the client decides?how much to send the agency each month. The agency then takes that?one check and disperses the funds?to creditors.
Ellen Swepston used Money Management International to clear away $15,000 in debt.? It took her six years to become?free of the debt, but?it could have easily taken her 15 years, judging by calculations on debt calculators.
"They somehow were able to negotiate a portion of the?monthly payments were gonna' go straight to the principal and the rest would be eating at the interest instead of your interest taking the first chunk," said Swepston, who is now debt free and saving to buy a home.? She said she pays cash for everything now.
"I'm so much happier without those bad habits," she said.