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Your Credit Cards and Debt Ceiling Crisis

Your Credit Cards and Debt Ceiling Crisis

Confused by all of the rhetoric coming out of Washington DC? You’re not the only one. Most Americans know the basics: the U.S. and its credit ratings are in jeopardy, the politicians are acting like two year olds and if a solution isn’t found, the U.S. is facing high unemployment rates and even higher interest charges on their credit cards, mortgages and other bills.

Let’s face it, many of us are frustrated with the apparent priorities of our elected leaders. In many ways, it seems as though they’re more interested in face time on all the news networks than they are in finding a solution that will ensure their constituents’ 401k plans, social security payments and unemployment benefits aren’t jeopardized.

The Press Releases

With statements from these officials such as “Reaching the limit on total outstanding debt could force a dramatic and sudden cut in federal spending that would destroy jobs and threaten the recovery*”, it’s understandable why some of us are beginning to lose sleep. Further, President Obama told CBS News:

Well, this is not just a matter of Social Security checks, these are veterans checks, these are folks on disability, their checks. There are about 70 million checks that go out…I cannot guarantee those checks go out on August 3rd if we haven’t resolved this issue because there may simply not be the money in the coffers to do it.

The Reality

The answers aren’t easy, but it’s fair to say a proactive approach now will prevent a panicked reactive approach should the worse case scenario happen. We checked with all the credit card heavy hitters to see what their take was on the potential of higher APR rates and concerns that many of their customers have about not being able to maintain their credit card payments. Here’s the official word, along with a few recommendations of how you can turn that proactive stance into action.

The Action

The first thing every credit card holder should be aware of is that they are not alone. By this, it simply means your credit card company is very much aware of the current national financial problems. Remember, they watch those same endless flood of press releases on the evening news. You are not going to be the first one who picks up the phone and says,

I can’t pay my bill because the government suspended my monthly payment.

There are millions who stand to lose their monthly retirement, social security or other monthly government payments and you can be sure the majority have one or more credit cards in their wallets.

The Compromise

Visa, MasterCard, Discover – all of the major credit card issuers are working to reach out to people sooner rather than later. For instance, before the recession, a late payment wouldn’t have triggered a collection call until a consumer was at least a few months behind in his payments These days, creditors are working to contact their customers much sooner in an effort to work out viable solutions. Odds are, they already have new guidelines in place for consumers as they seek to maneuver these difficult financial waters. The key is to make contact.

Consider a New Avenue

Crazy as it sounds, many Americans are choosing a better credit card that has lower APR rates and hopefully, a 0% intro APR for balance transfers. Their way of thinking is that by transferring some of their credit card debt to an offer that’s going to be interest free for a year or longer, it will be just enough of an advantage to pay down their balances as we collectively move through this latest national crisis.

If you’re considering looking into a new offer, be sure to check out the Discover More Card. You’ll enjoy a 0% APR on purchases and balance transfers for 15 months. Plus, there’s no annual fee and you earn cash back. Another worthy consideration is the Maximum Rewards Platinum Edition Visa credit card. It too has a 0% intro APR for 12 months for balance transfers and 6 months on purchases made with the credit card. Like the More card, this Visa rewards credit card also doesn’t burden you with an annual fee.

We might not can control what ultimately happens with the debt ceiling crisis, but we can maintain control over our own financial futures. It’s an empowering sense once we realize our personal outcomes are how we define them. Becoming your own worst enemy is never the solution, so if you’re experiencing problems making your monthly credit card payments, your best first step is to contact your card carrier.

*Letter sent by 235 leading economists to U.S. Congress July 27, 2011.

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