January 6, 2006 – Posted at 4:12 p.m. CST
JONESBORO, AR -- The holidays have come and gone, but long after we are through enjoying all those gifts, chances are, we'll still be paying on them. Out of control credit card debt has swept the U.S. More than 35 million Americans only make the minimum payment on their cards. And while January is the busiest time of year for credit counseling, it's never too soon to look for help.
New rules went into effect in January first, requiring banks to increase the minimum payments, sometimes doubling it, so consumers will pay their debts down faster. The average family has seven credit cards and carries between $9,000 and $10,000 dollars worth of debt. But credit counselors say it's not the cards that are the problem, it's how people use them.
“It's the abuse of credit cards that will really get families into trouble,” said Garry Patterson, financial specialist & credit counselor for Clearpoint Financial Solutions.
Patterson helps consumers control their debt, he suggest the first step it to start simple.
“A budget is not something difficult. It’s simply a plan about what you are going to do with your paycheck,” said Patterson.
Pay attention to where your payments are going...minimum payments, over the limit fines and high interest won't pay off your principal.
“You could be making that minimum payment and be going deeper into debt,” said Patterson, “So make sure that minimum payment is enough to cover any miscellaneous charges on that account and actually make that balance go down.”
New bankruptcy laws are making it more expensive and difficult to file. But often credit card companies will work with consumers on payments. Be careful when consolidating loans; make sure you are getting a good interest rate.
“Begin to plan for next year,” said Patterson, “Don't wait until next December to find out where that Christmas money is going to come from. The thing is, if you are going to spend $1,000 dollars next Christmas, you need to be putting back about $83 a month in a savings account so that you are ready and you are not tempted to use those credit cards.”