Top Credit Questions Answered Part 1: Dealing With Credit Card Debt
written by Credit-HQ ExpertOf all the organizations that we do business with, credit card companies are in a class by themselves. They seem to live by rules that don’t apply to the rest of the world. So dealing with credit card companies can become a little baffling as well. Let’s discuss some of the most common areas of confusion that come up when it comes to credit card companies.
Out of Control Interest Rates: Can credit card companies raise interest rates even if I am a good customer? If so, what can I do to put a stop to it?
There is a clause in that fine print cardholder agreement you got when you signed up with the account that allows credit card companies to jack up your rates on existing accounts. They called this process “Universal Default”. In fact, all the credit card company has to do is send you an update to that hard to understand cardholder agreement and they can change the rules to suit them. This is probably the most maddening thing about trying to deal with credit card companies but it is something we have to recognize as a reality.
You might be surprised how effective it is to just call the credit card company to talk about the interest rate. Often if the credit card company fears you are going to close the account and give your credit business to another company, they will lower your rate and cap it. This makes it in your advantage to maintain more than one credit account because the credit card company will see that you have options and be more willing to play ball with you.
But your first option is to ask them to lower your rate. They won’t lower them if you don’t ask and they might if you do. If they refuse, simply close the account and move the outstanding balance to a credit resource that will do business honestly with you.
Debt Collection Agencies: What if the credit card company turns over my outstanding balance to a debt collector?
This can be a scary situation as debt collectors have a reputation of being rough on people to get that money. Be aware that even if the debt collector is harassing you, you still have legal recourse. If the debt is old, there may be a statute of limitations in your date that dictates how long the credit card company can continue to harass you about the debt. So one step you can take to defend yourself if things have gotten so bad between you and the creditor that a collections agency is involved is to contact the Attorney General in your state. There are laws against harassment even if you owe them money and you can get protection from threatening phone calls.
If the statute of limitations on the debt has run out, you can write a letter to the collection agency to let them know they don’t have a leg to stand on. Be forceful that you are requesting them to stop and have the letter delivered certified so it is a legal document if you need to turn the problem over to the authorities.
If the debt is before a consolidation or bankruptcy, that step has already removed the amount you owe. It does happen that a creditor comes after a debt that is quite old threatening to ruin your credit rating. But if the debt is over 7 years old, they can’t follow through on the threat so don’t let it get to you.
How Many Credit Cards?: Is it Bad to Carry More Than One Credit Card?
From a credit score point of view, as long as you don’t have dozens of credit accounts, you won’t be harmed by having two or three accounts. Most adults will carry different accounts for different reasons. You may have an account for gas and another one for large purchases because of the rewards. When using reward based credit cards, just keep in mind if the fees and interest make it worth running up that balance.
You can carry two or more credit cards without harm to your credit rating. Of greater importance is that you make the payments on time and keep the balances significantly below your credit limits. It is even healthy to put a few transactions through a credit card that you don’t use very often just to keep it active. Your credit rating will improve if it shows you have good credit and you know how to use it.
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