Beware of Those Debt Bamboozlers

The producer of my radio show, Real Money, booked a guest who called himself a Credit Enhancement specialist.

He rolled up in a Hummer with gold rims, blue jeans and a throwback jersey chewing a piece of gum. Let's just say when he entered the studio and preceded to share how many folks he had helped get out of debt for a fee I was not a happy camper. If someone tells you to pay them money to get out of debt, RUN, don't walk, to the nearest not-for-profit credit agency to get some assistance with your finances. ...

Dirty Credit Card Tricks

Say "Bye-Bye" to Your Grace Period
No grace period means that you'll start accruing interest the moment you charge something and that can cost you a bundle of "extra" interest. Most credit card issuers have already reduced their grace period from 25 days to 20 days. Many others have eliminated the grace period altogether. Now they are coming up with more and more reasons to take away your grace period. Miss a payment? Stop carrying a balance? Bye-bye grace period!

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Punishing You for Being Smart
These fees are the lowest of the low because they penalize you for being a responsible credit card user. Some of the biggest offenders include charging you a fee for:
+ Closing your account
+ Failing to use a card for a period of time (such as six months or a year)
+ Not carrying a balance
+ Every transaction each and every time that you use your card
If your card charges you any of these fees, it's time to look for a new card!

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Lowering Your Minimum Payment
Another way some cards try to jack up their profits and lure you deeper into debt is by lowering the minimum payment due on your balance. It used to be cards required a minimum monthly payment of about 4% of your balance, but many now require as little at 2%. Don't fall for it! Going from a $40 payment to a $25 payment on a $2,500 balance means it will take you an extra 19 months to pay off your balance!

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Inviting You to Skip a Payment
Broke this month? In their infinite generosity (ha!), some cards will "invite" you to skip a payment. This "helpful" offer, which sounds great at first blush, often comes after the holidays when your balance is big and your wallet is stretched. DON'T DO IT! Skipping that payment can lead to a host of trouble from a higher interest rate to possibly having to make extra payments in the future. Are you starting to notice a pattern?! You should be skeptical whenever your credit card company does something "nice" for you without you asking for it!

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Tricky Timing
We all know that our payment is due on a certain date or it's late, right? But a new twist being thrown into the mix is having your payment due by a certain time on the due date. If your payment is due at noon, and gets processed at 12:01, you get socked with a late fee AND likely a higher interest rate. Gimme a break! Carefully check your statement so you avoid this trap.

SOURCE: Dirty Credit Card Tricks provided by AOL Money & Finance

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The fact of the matter is that the debt load that most people are carrying didn't happen overnight and the reality is that it is going to take some time and effort to dig your way out. One of the callers to my radio show shared how he got out of debt the old fashion way by stopping his spending and nickel- and-diming his way to financial freedom.

You know the saying, "most folks are one paycheck away from financial peril." Raynard shared that he was laid off from his job as an accountant and couldn't pay his bills. He was so distraught about his credit card debt that he took his knowledge of computers and offered his expertise to others for a fee. When he found another job he continued to direct every check he earned from his side business whether he earned ten or one hundred dollars to the credit card company. He was able to pay off eleven thousand dollars in debt in less than two years. Not everyone can develop this kind of discipline which is why you need to do some homework before you hand over your financial future to someone.

If you don't know which way is up when it's come to paying off your debt begin by visiting the National Foundation for Credit Counseling's website to locate an agency in your area that has passed their rigorous accreditation program.

The widely-known Consumer Credit Counseling Service (CCCS) is a member of the NFCC and they have affiliates across the country. Once you've narrowed your search down to one or two agencies, it's a good idea to check them out with one or more of the following to see if complaints have been filed against them: your state Attorney General's office, local consumer protection agency, and Better Business Bureau. You can find contact info for your State Attorney General at the National Association of Attorneys General
.
Fiscal Fitness: Choosing a Credit Counselor on the Federal Trade Commission's Web site is also a good resource.

But credit counseling agencies really can't do anything for you that you couldn't do for yourself, theoretically at least. You could attempt to negotiate with your creditors to lower interest rates, extend loan terms (to catch up on late payments or make your payments more manageable), or remove late fees. In reality, the average person will not have the same discipline as Raynard or be effective at negotiating with creditors but it may be worth a shot before you enter into a debt repayment plan. If you enter into a repayment program it is reflected on your credit history.

Be honest with yourself: if a lack of spending discipline is what got you into a financial mess you may need professional help. A wise man once said, "You can measure a person's success by their ability to ask for help." Just make sure the person you ask for help has your--and not their-- financial future in mind.

Deborah Owens is author of Nickel and Dime Your Way to Wealth and Confident Investing. Visit her website at http://deborahowens.com

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