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Debt Management Guide 2008
Danger ahead
Debt problems don't just suddenly appear. If you're alert for signs of trouble, you can probably avoid them.
Danger ahead
Step slowly onto the balance-transfer wagon
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It's also important to understand your credit card agreements. "Always read the fine print," says Michelle Oliver, owner of The Oliver Financial Group in Richmond, Va. "Each credit card company is different when it comes to laying out their own rules. In other words, what may be good for one company may not be good for another."

For example, some cards may charge a hefty balance-transfer fee. Such charges must be factored into your decision.

Also, it's important to know yourself. If you have a history of paying bills late, understand that any late payments could lead to the immediate termination of the promotional rate. In that scenario, you'll be stuck with whatever rate the creditor gives you, which may well be higher than the rate you had before the transfer.

Making promotional offers pay
Promotional offers in the mail can help you improve your debt situation in another way. Often, such offers can be used as leverage to get your current creditors to lower your interest rates. If another lender offers you a better rate, call your current creditors and let them know you're thinking about taking the better offer.

"If consumers approach the company and tell them 'I'm considering switching, can you lower my interest rate?' most of the time that will lead the credit card company to do that," says Bryan.

Your current creditors won't want to lose you, and if you've been a longtime customer who has generally paid your bills on time, they're more likely to work with you to make your credit card agreement more attractive.

There are various ways that credit card companies work with consumers. For example, some creditors will lower your interest rate if you agree to let them take the payment each month automatically from your checking account. Creditors can also help you out by deferring payments if you're going through a rough time or moving payment due dates around to accommodate your cash-flow situation.

An added benefit of staying with your current credit card company rather than jumping ship is the history you have with your current creditor. If you run into problems down the road, it may count for something. However, if you still decide to transfer the balances on your credit cards to a low interest credit card, make sure you're doing so as part of a plan to eliminate your debt altogether, rather than merely doing so to free up some extra money.

"If a person is that savvy in moving debt, then they should be savvy as well in saving, investing, and decreasing and eliminating the debt," says Oliver. "Shifting the mind-set to eliminating the debt rather than lower charges will bring a person closer to financial freedom."

-- Updated: June 16, 2008
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