Limit Your Credit Card Balances to Avoid the Collection Nightmares

Credit cards are great if you can pay your entire balance each month - you receive a hassle-free loan at no cost. But if you owe any balance, even a small one, you will be charged interest, which quickly adds up, particularly if you carry hefty balances and make only minimum monthly payments. And if you miss payments completely, the debt collectors will begin to hound you.

Credit card issuers package credit card debt and sell the combined debt to third parties, who are notoriously merciless at getting their money back from tardy credit card holders. In Unholy Alliance Fleeces Social Security Recipient, Laura Rowly tells horror stories of senior citizens, who were behind on their payments, having their bank accounts frozen so they are unable to withdraw any money. And, in some instances, they were charged high fees after they unwittingly wrote bad checks against the frozen account.

Rowly discusses the plight of these seniors and how new laws might help them. But the surest way to protect yourself is to limit the amount of your credit card balances. Use your credit card only if you can payoff the balance in a timely manner, preferable each month but no longer than two or three months.

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Posted November 19, 2007.