Put the freeze on credit card debt

Today, credit cards are easy to get. Too easy. Close to 60% of cardholders carry a balance from month to month. And when credit cards are abused, the balances get larger and larger until consumers are not able to make even the minimum payment each month.

Here are some of the warning signs of debt:

•Â Your current cards are maxed out.

•Â You barely make your minimum payments.

•Â You miss minimum payments.

•Â You don't know how much you owe.

•Â You cannot name all of your creditors.

•Â You keep filling out applications for new cards.

•Â Your credit has been denied.

•Â More than 20% of your income is used to pay off installment debt.

•Â You hide bills from family members.

•Â Your creditors are beginning to call.

If you see yourself in any of the above, you need to take charge of the situation. Things may appear to be out of control, but you do have the ability to turn the situation around.

How to pay off your debt

Before anyone suggests the "B" word, you should make an effort to pay off your debt on your own. Get out a pad and pencil and make a list of your creditors. How much do you owe each of them and what is the interest rate each is charging you? Have you been late or missed payments? Contact your creditors and let them know about your situation. Most will try to work with you and you may even be able to get a lower interest rate on your account.

If your credit history is relatively good, then you may be able to fix the problem yourself. Credit card companies often send pre-approved applications with low teaser rates. Grab the first one that comes and transfer your debt. If the credit line isn't large enough to accommodate all of your debt, ask for an increase. A lower interest rate will make a big difference, but read the fine print and look for hidden fees. Be sure you also cancel the old, higher interest rate account.

If you can't use the above method of consolidation and are carrying several cards with a balance, pay off the card with the highest rate first, then tackle the next one and so forth. The goal here is to pay off all of your debt and then be able to pay the credit card bill in full each month when it arrives.

You may need look to other resources for borrowing. A last resort may be to look at your 401(k) or 403(b) plan at work. Using your retirement plan money to pay off consumer debt is not good fiscal policy, but it might be the only avenue open to you – if you choose this option, be sure to pay it off.

Beware of offers to help you consolidate your debt. Many finance companies charge very high rates and spread the loan out over many years so your payments are small. You don't want to take on long-term debt to pay for short-term pleasures.

While you are struggling to pay off this debt, don't buy more stuff. If you realize that you don't know how to use credit cards safely, you may need to learn to perform plastic surgery. It's easy: Get out the scissors and cut them up. Cancel all but one and leave that one at home unless you are traveling.

Here's something that may help, especially if your impulse shopping is out of control. Take your credit card and put it in a bowl of water. Now stick it in the freezer. After a few hours your credit card is sitting in its own iceberg. Now, if you need to use it, you must take the time to defrost it. It may take the better part of a day and by that time the impulse to buy those shoes will have passed. A note of caution here: Don't try to use the microwave to defrost your mini iceberg. The microwaves will ruin the back of card and actually melt it, rendering it useless.

If you just can't make the above suggestions work, there is help out there. Contact the National Foundation for Consumer Credit, a national network of 1,450 nonprofit community organizations that provide consumer credit education, budget and debt counseling and debt repayment programs for families and individuals. Many of its members are locally managed nonprofit agencies operating under the name Consumer Credit Counseling Service. They can be reached at (800) 388-2227 or by visit their web site at www.nfcc.org. CCCS may be able to do things for you that you cannot do for yourself, such as negotiating with the credit card companies to lower or even stop the interest on your debt. The counselors can help establish a spending plan to determine your financial options, re-establish credit and arrange a debt management plan. NFCC is a nonprofit organization and can provide services at no cost or they will charge a fee on a sliding scale so no one is ever turned away.

Another source for help may be the Debt Counselors of America (800) 680-DEBT. DCA is a nonprofit Internet-based counseling service, which uses Certified Financial Planners to help consumers. DCA assists individuals with debt, credit and money problems through their Web site, www.dca.org, by primarily providing articles that you can purchase or chat rooms where your questions can be answered. Either of these organizations can help a debt-strapped individual get back on their feet. PR