Cut-off Your Liabilities with the Debt Management Plans

The financial institutions that advertise credit counseling often arrange for consumers to pay debts through a debt management plan. In a debt management plan, you deposit money each month with the organizations that perform credit counseling. These organizations use the deposits to pay your credit card bills, student loans, medical bills, or other unsecured debts according to a payment schedule they’ve worked out with you and your financiers. The creditors may agree to lower interest rates or waive certain fees if you are repaying through a debt management plan.

The Building Societies of UK has found that some organizations that offer such plans have deceived and defrauded consumers, and recommends that consumers check their bills to make sure that the organizations fulfill their commitments. If you are also paying off your debts through a debt management company then contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the organization handling your plans related to the management of your debts. If the creditors have accepted your plan then it is important that you:

*Always make timely and regular payments.
*Never forget to read your monthly statements promptly to make sure your creditors are getting paid according to the plan.
*Immediately contact the organization responsible for the management of your debts if you are unable to make a scheduled payment, or if you discover that creditors are not being paid.

Also, you need to be aware that if payments to your debt managers and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in such plans, including lower interest rates and the waivers of fee. If, in any case, you fall behind on your payments, you may not be able to have your accounts “re-aged” again, even if you start a new plan with a new advisor. It simply means your credit report will have “late” marks and you will rack up late fees, which in turn, will lead to more debt that could take longer to be repaid.

Experts warn over multiple credit cards

Are credit cards a monster that eats up your money in a big way? Well, it is really so if we go by the statistics put forward by CreditAction - a leading national money charity. The figures show that the average interest rate on credit card lending is 17.67%. It is a whopping 12.4% higher above the base rate level that is fixed by the Bank of England. Little wonder that credit cards are the biggest culprit when it comes to people falling in the debt traps.

People resort to credit cards for the sake of convenience in payment, but it should be kept in mind that over-dependence on these cards can get you in trouble. If you fail to pay the credit card bills within the interest-free period, you are charged very high interest rates. So, be wary of the trap. On an average, a Briton holds 2.4 credit and debit cards that are more than twice the number in any other nation. People hold more than one card for varying reasons. However, the problem arises when you have to keep an eye on the spending and repayments across several cards.

You should be cautious that you do not miss the minimum payments on your credit card bills and get exposed to heavy penalties. Experts warn people against getting used to taking credit through these cards and accumulating their debts.