If you want to focus on better credit management, you may want to start with your credit card problems. Although other debts like your mortgage or student loans are relatively bigger, it is your credit card balance that can get the most from you. The other two can help you grow your personal wealth. But your credit card debt will technically just allow you to acquire junk easily.
Not only that, it is the easiest debt to grow. You do not need to reapply to use it again. You can keep on using it until you reach your credit card limit. By that point, the debt would have grown really big. It is a scary possibility that you need to be aware of.
According to the accumulated data from CreditCards.com, the average credit card usually have a balance of $8,220. With the latest APR averaging 13.14% as of February 2014 and the outstanding revolving debt at $870.4 billion as of April 2014, you know that this can quickly escalate into a financial crisis.
You have to seriously focus on how you can keep your credit card problems from ruining your life. If this is the case, you want to help yourself by educating yourself about the typical dilemmas that credit card holders encounter.
8 problems of credit card holders and how to solve them
If you think about it, the problems you encounter as a credit card owner will go beyond your balance. Here are 8 common credit card problems and their respective solutions.
When the interest rate is too high.
If you find your rate to be too high, you can opt to transfer your balance into another card that has a lower interest rate than your current. Also, one of the things that you should know about credit cards is that the issuer has the right to increase the interest rate – even if you showed good payment behavior. But the law requires them to give you notice prior to implementation to help you adjust. What you have to remember is that you do not have to accept that change if you do not want to. You can call the creditor and tell them that you do not want to have a higher interest rate. They can decide to retain your old rate, persuade you to accept the new one or let you close the account after paying off the full balance with the old rate.
When you find an unauthorized entry in your billing statement.
This is why it is important for you to always look at your billing statement and check every detail before sending a payment. Sometimes, it happens that your billing will show purchases that you did not make. It can be an error in the part of the creditor or it can be the result of an identity theft. When this happens to you, ConsumerFinance.gov revealed that it should be reported to the card issuer immediately. This is one of the credit card problems that require investigation. If you did not lose your card and yet your account number is stolen, you should not be held liable for that unauthorized use. If you lost your card and you reported it immediately before any unauthorized purchase is made, then you will not be liable for these charges. But if you do it after the card is used, then you have to pay for charges that is no more than $50.
When your due date is far from your payday.
The reason why this is a problem for some is because by the time their due date comes, they do not have money anymore. This can also be a problem if your multiple credit cards fall on different due dates. Remembering all the dates can be a challenge. To rectify this situation, you can simply call the creditor and ask them to change your due date for you. This is actually one of the easiest credit card problems that you can solve. Just make sure you choose the right date.
When the account on your credit report is wrong.
If you had been a good manager of your credit, you should be monitoring your credit report regularly. Make sure that the account stated in your report is correct. If not, you may want to call the credit card company concerned to ask them to revise the information. You can also send a dispute letter to the credit bureau to have it corrected.
When your card is declined.
There are many reasons why your card may be declined to accept a new purchase. If you are beyond your credit limit, the only way to solve this is to pay off your balance. If your card expired or cancelled, you can call the creditor to check how you can reinstate it. In most cases, the expiration or cancellation happens when you do not use your credit card for at least 6 months. Make sure you have a backup fund available so you can still proceed to your purchase.
When you forgot a payment.
One of the rules of credit card use that you need to remember is to pay your dues on time. But if you forgot and it was only one time, you should not worry. The most that will happen is you will be charged with a late penalty fee. As long as you do not make a habit out of it, your credit score should be just fine. Credit card problems like these can be avoided. Next time, if you know that you have a tendency to be forgetful, change your due date or set up reminders that will prompt you to pay your dues on time.
When your card does not swipe.
This really happens to a card over time. If you are in the midst of paying a purchase, you can type in your credit card information to proceed with the purchase. That usually works. Then you can call your credit card company to send in a replacement.
When you cannot pay your balance.
There are two scenarios here. If your payment fund is merely delayed for a few days, you can call your creditor a few days before the due date and tell them that you cannot afford to make a payment on time. You can give them a new date of payment and request that they cancel the late payment charges. Just make sure that the second date will be met. Another scenario is when you cannot pay your balance because you have insufficient funds and you are not expecting any money to pay it off. That is something that we will discuss in detail next.
How to pay off your credit card balance
One of the biggest credit card problems is when you are unable to pay off your balance because you do not have the money. In a study done by CardHub.com, it is revealed that consumers pay down their credit card balance during the first quarter of the year. While the habit held true for 2014, it was lower compared to the previous years. This can be a sign that people are slipping back into their old ways or they really do not have enough money to pay off their balance.
If you think that your problem is the latter, we have a couple of tips for you. One of the best ways to pay off credit card debt is to follow a step by step process.
- Create a budget. This will help identify your income and expenses. When you have these details laid out, you can see how you can shift your expenses to accommodate your debt payments.
- List your credit card debt. Before you can find a solution, identify the problem first. List all your debts and the different accounts – if any.
- Call your creditors to discuss your debts. What you can do is to try and negotiate for a lower rate so you can come up with a payment plan that you can afford. If you are in a real financial crisis, these creditors can help you out.
- Look for other debt relief options. If the last one did not work, research the options that you have to solve your credit card problem. You have several choices: debt consolidation, balance transfer, debt settlement and debt management. Check which one them will suit your payment capabilities best.
When you have paid off your debt, try to make sure that you will practice the right credit card habits to avoid more problems in the future.