Why you need to reduce credit card debt
A growing number of new military recruits have more than 4 credit cards at their time of enlisting. Many of them are able to make their payments work for a period then suddenly fall into debt from the interest rates. They aren't doing anything different, but their credit score may have changed. Even though their credit was fine at the time they signed up, interest rates can be changed over time without them knowing it.
A lot of people think that having several credit cards is good for their credit. It is true having a couple is better than just one, but too many credit cards can cause you to have bad credit as well. There are many ways that each individual card can incur unexpected costs and adding up over several cards can cost you significantly.
- One late credit card payment can end up costing a lot more than you think in the long run. Not only will you have to incur late fees but your interest rates and possibly your credit could be affected. A late or missing payment on your car loan can result in an increase in your credit card bills.
- Credit card companies are only required to give 15 days notice when they change the terms of your credit card agreement. They can increase the late payment fee and raise the interest rate without the giving a reason. If you make a late payment or miss a payment your rate can double or possibly triple in a short time.
- Some credit cards offer interest free purchases and/or rewards if you buy certain products or shop at certain stores. These discount offers are only applied if you maintain your payments. Make sure you keep up your payments if you have interest free purchases and balance transfers.
- Your credit card's interest rate isn't only affected by your card payments. Missing a car payment, mortgage payment or even a utility bill can hurt you. When your credit card company re-assesses your credit score they could adjust your interest accordingly.
- New laws which will curb some of the more predatory practices of credit card companies did not begin until mid-2010. Under these rules, credit card companies can no longer raise interest rates on existing credit card balances without explanation. You will need to be 60 days behind on your payment before the credit card company can increase rates on your existing balances, and even then, credit card issuers will be required to restore original rates if you pay your minimum payment on time for six months.
Credit card companies can hold you hostage at the very time you really need financial assistance without you knowing it. Attempt to eliminate the balances of any outstanding credit cards over about 3 to 6 months. At which time you should cancel a few of the cards. It is rarely good to have more than 3 credit cards or to cancel one card while another has a remaining balance.
If your interest rates are continuing to grow and you suspect your credit score may be the problem you should consider working to improve your credit score. Contact Lexington Law today to receive a free credit consultation in which you can learn more about your credit rights and how credit repair may be able to help you achieve your credit goals.