December 12,2006

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  Dealing With the Problem (Before It Happens)

  It may not surprise you that the main goal of your credit card company is to make money. If you've looked at your monthly statement and examined the penalties, surcharges, and interest rates that figure into your balance, this isn't exactly news. Regardless, cash-strapped cardholders often make a huge mistake when they find themselves coming up short on their minimum payments, and do nothing. Left unchecked, those unpaid minimums can double and even triple with late fees and new payments due. Without communication from you, your card issuer has no choice but to send you to collections, where you will face the hassle of multiple daily phone calls and nasty letters – not to mention a blemish on your credit report, which, like a streak of bad luck, can stick around for upwards of seven years!

  
  The way to prevent this credit headache is to keep in touch with your credit card company, and be up front with them about your financial situation. Despite your probable embarrassment about your situation, or fear of some sort of discipline or rejection, your debtors would more than likely hear about your issue before it escalates. Contacting customer service at your card issuer before your payment is due increases the likelihood that they will work with you. Wait until the account is past good standing, and you may have no recourse. It's true what you learned in preschool – honesty really is the best policy.
  
  
  
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