Get Debt Under Control

Whether it’s the mortgage, credit cards, or grandchild, make sure he or she is or student loans for the kids, consumer keeping up with payments, so your credit debt adds up to a big burden for millions rating isn’t negatively affected. of people. When you carry a lot of debt, »» Credit cards: Credit card rates can vary it makes saving for retirement that much tremendously. They may range from the harder. Today, more Americans than ever special zero percent rate you received are carrying debt into their retirement when you applied for a new card, to 20 years. percent or more. While you can take some comfort in Now that you have a clear sense of what knowing you’re not alone when it comes to you’re dealing with, you can take steps to debt, you can also take action to tackle it. start reducing your debt. Here are a few simple steps to get started Get the Right Kind of Help Add It Up If you feel like you’re in over your head, help The first step is to make a list of what you is available, but be sure you know whom owe and how much you’re paying out each you’re asking it from. Thousands of scam month. Start with a blank sheet of paper. artists make their living on debt reduction Then look at your statements, and record fraud, so be careful. A safe place to start is your monthly payment and the interest rate with the nonprofit National Foundation for (sometimes called the finance charge) for Credit Counseling (NFCC), at www.nfcc. each debt. org. Through NFCC, you can connect with Your sources of debt could include: a counselor for help with credit card and other debt, as well as help with budgeting. »» Mortgage: Your interest rate may be fixed, or you may have an adjustable rate If you are struggling with your mortgage, mortgage (ARM). you may be eligible for special help under the “Making Home Affordable” plan. Visit »» Car loan: The finance charge is usually a www.makinghomeaffordable.gov for fixed interest rate. information on refinancing and other types »» Home equity loan or line of credit: of assistance. Your home equity loan will have a fixed The federal Consumer Financial interest rate, but if you have a line of Protection Bureau is charged with going credit, it may be adjustable. after predatory lending practices. A new »» Student loans: If you took a loan out, rule from the agency allows you to get record your payments and interest your credit card score for free if you’ve rate. If you cosigned a loan for a child experienced a problem, like getting turned down for a loan, because of it. Also, the »» When you cancel a card, do so in writing Federal Reserve has issued new pro- and keep a record of the cancellation. consumer credit card rules, like limiting late payment fees. Prevent More Debt from Piling On You can prevent your debt from growing Reduce Credit Card Debt by eating out less, turning off the lights Here are some ways to go after your credit and turning down the heat when you’re card debt: not home, and resisting buying things you “want” but don’t really “need.” If you »» Call your credit card companies and ask depend heavily on plastic to pay daily for a lower interest rate. They may be expenses, the best way to cut spending is open to it, especially if it means you’ll to pay with cash. If you don’t have enough eventually pay your debt off. cash for a purchase, don’t make it. For more »» Pay more than the minimum required ideas on how to cut expenses, see AARP’s every month. Visit AARP’s Credit Card Cost Cutting tip sheet at www.aarp.org/ Payoff Calculator to see the impact of orderfinancialpubs. paying more than the minimum, at If you can’t get ahead of your debt, consider www.aarp.org/moneytools. taking on a part-time job and putting the »» Avoid late fees and hiked interest rates by extra pay toward your debt. And once you’re always paying your bill on time. out of debt, apply what you’ve been paying toward saving. You might want to consider moving all of your credit card debt to your card with the lowest interest rate. Before you do: Take Action! QQ Check out www.aarp.org/money/credit- »» Know that credit card companies loans-debt/ for articles and tools on typically charge for this service. Make managing debt. sure you understand the fee. QQ Get a handle on what you owe by writing »» Ask what interest rate you will pay on the down each debt’s monthly payment and balances you move onto the card, and finance charge. how long the rate will last. QQ See how paying a little more each »» Find out what the interest rate for new month on your credit cards lowers your purchases will be. debt with AARP’s Credit Card Payoff Calculator. Find it under Money Tools at »» If you have multiple cards, consider www.aarp.org/money. chipping away at the one with the lowest balance first. The satisfaction of paying QQ Consider paying down high-interest off a card can be a great motivator. credit card debt first, or target your lowest balance to get that feeling of satisfaction to motivate you to pay off your other debt. QQ Take a look at AARP’s Cost Cutting Financial Security tip sheet at www.aarp.org/ 601 E Street NW orderfinancialpubs for ideas on how to Washington, DC 20049 reduce expenses.

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