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Tips for handling credit card debt

Credit cards vs. debit cards: Which is better and safer?
Posted at 1:24 PM, Aug 10, 2020
and last updated 2020-08-10 16:43:42-04

LAS VEGAS (KTNV) — Thousands of people in the Las Vegas valley are trying to get by on reduced or non-existent paychecks these days. That has some turning to their credit cards, and that can add up quickly.

13 Action News Anchor Tricia Kean talks to an expert about the best ways to handle those mounting credit card bills.

CREDIT CARDS ARE DANGEROUS

"I was in way more trouble than I thought I was in because I was young and dumb," said college student Tyler Grubbs.

She knows firsthand, credit cards are dangerous.

"I have a shopping problem. Self admittedly. I know that about myself," said Tyler.

NO SPIKE IN DEFAULTS

So she's worked hard to pay off her debt and sworn off of credit cards. It turns out even in the middle of a pandemic, many Americans are doing the same.

"So far we have not seen the expected spike in delinquency's and defaults," said Industry Analyst Ted Rossman with CreditCards.com.

HELP IS AVAILABLE

But there's plenty of debt out there. If you're worried about making your monthly payment, Rossman says to contact your card company about their relief program.

"Help is available but you have to ask. If you get into the hardship program they can let you skip a payment or sometimes even more," said Rossman.

INTEREST RATES ARE HIGH

In some cases, credit card companies may lower your interest rate or even waive the interest for a month or two. But skipping a payment without contacting your credit card can make things worse.

"Interest rates are still quite high. The average is about 16%. But many people are paying 20 and even 25%," said Rossman.

CASHBACK OR CREDIT

If you have a card that carries an annual fee, ask if it can be waived or lowered. Rossman says you can also look into using your rewards to cover your bill.

"You can typically redeem for cash back or a statement credit," said Rossman.

EXPERT HELP

If you're really in trouble, try calling Money Management International. The non-profit provides debt counseling 24-hours a day.

"What they can do is give you good advice. They can consolidate your payments into one. They can lower your interest rates. They can hold your hand through what can be a difficult process for a lot of people," said Rossman.

AVOID DEBT SETTLEMENT COMPANIES

Just stay away from debt settlement companies that often charge a fee before they're even willing to help you.

As for Tyler, she says she staying clear of credit cards for now. But admits it's only a matter of time before she's swiping again.

"They do come in handy and the cashback was really nice when I was being responsible enough to be getting cashback. But I'd definitely do it differently next time," said Tyler.