One of the first forms of communication between you and your creditor may be a courteous phone call or letter. But, if you fail to remedy your delinquent account, the creditor may become more aggressive. If you have begun receiving phone calls from creditors or debt collectors, you need to understand your rights and take immediate action. Here’s what to do:

• If you are having difficulty paying your bills, or your credit card’s minimum payment has become too much to handle each month, take a moment to contact your creditor before you miss a payment. Often times, creditors will work with you to set up a reasonable payment arrangement before your account heads to a debt collector.
• Read up on your rights through the U.S. Federal Trade Commission (FTC). The FTC has a number of publications that can provide you with information regarding the Fair Debt Collections Practices Act. This Act essentially makes it illegal for debt collectors to make threatening, harassing or nuisance phone calls. If you are being harassed by a debt collector, or feel that the debt collector is not abiding by the laws outlined in the Fair Debt Collections Practices Act, you should immediately contact the FTC and file a complaint.
• It is important to realize that debt collectors do not go away very easily, so instead of ignoring the problem, face it head on. Begin by asking for written verification of your debt so you can get a good understanding where you stand.  The Fair Debt Collections Practices Act allows consumers to ask for this written information within 30 days of being contacted by a debt collector.
• If you are deep in debt and debt collectors are threatening wage garnishment, it is vital that you contact a consumer lawyer. Without a professional on your side you could be charged with paying much more than you actually owe. If you have a lawyer representing you in court, you have a much greater chance of paying less or having your case dismissed.

For many of us, a major challenge each month is staying within our budget. Often times, a few bucks in our wallet disappear in the blink of any eye. From our morning latte to stopping off to buy a gallon of milk and a loaf of bread, our budget is blown in a heartbeat.

If you want to get a handle on your budget, the first thing you need to do is consider where your money is going. In order to accomplish this, you may keep a notebook in your purse or wallet and mark down every expense (which is annoying and time consuming to do), or you can simply start swapping out your cash purchases in lieu of your credit card.

A credit card does something cash cannot: it tracks every penny you spend and then sends you an itemized list of those expenses each and every month, in the form of a credit card statement. So, why not consider using your credit card to track your household’s monthly spending?

Here’s what to do:

• Get a credit card with a great rewards program. After all, why not add a little incentive to your spending each month by racking up rewards points in the process?
• Swap out all cash, check and debit card purchases with your credit card.
• Don’t consider this project to be a “free for all” in terms of spending, as this will not accomplish much of anything. Instead, shop as you normally would; simply pay by credit card instead.
• When your credit card bill arrives, pay it off in full, otherwise your rewards won’t mean much.
• Sit down, as a family, and review your last month’s spending. Separate the purchases into categories and consider areas in which you can cut back. Have you exceeded your monthly grocery budget? Have your clothing purchases caught up with you? Do you really need to go out to eat that many times each month? Use this statement as your wake-up call to make changes so you can, once again, gain control of your family budget.

However, if you are serious about paying down your credit card debt, there are a few major steps you can take to accomplish this. Here’s what you need to do to tackle that credit card debt today:

1. Gather your debts and total them up. Your total credit card debt may be quite a bit more than you previous thought, especially if it is spread out over a number of credit cards. Don’t round totals or ignore even the smallest debt; total it all up, down to the penny, so you can get an accurate picture of your current debt load.
2. Talk about the debt together as a family. One member of the family should not have to shoulder the reality of your family debt. Instead, call a family meeting and discuss the problem with all members of the family so everyone is aware that major changes will be taking place in your household to tackle the family debt, once and for all. In addition, talk to each other about how you got to where you are and the changes that the family will make to ensure this type of debt does not present itself again.
3. If the debt is too much to handle, consider calling in the professionals. Avoid debt-elimination companies or debt-consolidation companies, as it is often quite difficult to discern between the legitimate and not-so-legitimate companies. Instead, contact the Association of Independent Consumer Credit Counseling Agencies and ask about developing a debt management plan.
4. Get immediate cash in hand. If you need to put a serious dent in your debt, consider selling material things. Is your house too much to handle? Is your car note simply too steep? Can you sell electronic equipment, furniture and other material goods to get back on track? Although this is often difficult to stomach, getting rid of those things that put you in debt in the first place may be just the way to go.

The truth is that spending on a credit card is a very easy action that is often done with little forethought. And that could mean a recipe for disaster. If you want to keep your credit card spending under control, here are some tried-and-true words of advice:

• Never spend beyond your means – Many people have heard this, but few people really abide by it. Turn your spending into things you truly want and can afford, not things you want but really cannot afford. As a general rule, if you cannot afford to pay off your purchase in a month or two, you probably shouldn’t purchase it. And the best case scenario is to charge only what you can afford to pay in full the following month.
• Think twice before using a retail credit card – Retail credit cards are so enticing. From their special coupons and deals to their “member only” perks, it is very easy to fall into the trap of a retail credit card. However, this enticing card may also come with a hefty interest rate and even heftier fees. Plus, many studies have shown that people spend much more in a store when they have a store credit card in their back pocket.
• Cut down on your credit cards – The truth is that most people need only two credit cards: one for everyday spending and another one for emergency use. Don’t go overboard and shove numerous credit cards in your wallet; it will only encourage overspending.
• Stop and think before you charge – Often times, simply by stepping back and taking a moment to stop and think about the purchase you are about to make on your credit card, you may spend less. Credit card spending, because it requires no upfront cash, is a habit that can quickly spin out of control if you don’t really take the time to reevaluate the importance of your purchases.

• Order a copy of your credit report – Everyone is entitled to a free copy of their credit report, every 12 months, from each of the three credit reporting agencies. Take some time and really study your credit report so you can be sure all information is accurate and recognizable. If anything looks out of the ordinary or if you notice errors or discrepancies, contact the appropriate credit reporting agency immediately to get the matter resolved.
• Look at your debts – Sure, you know you have debts, but have you ever laid them all out on the table and really took a good look at your balances and interest rates?  Simply by taking the time to review your debts you can change the way you look at your debts and how you can tackle them and pay them off. If you are paying too much in interest rates, consider your options. Can you contact the creditor to negotiate a reduction in your interest rate? Can you transfer your balances onto one credit card with a competitive interest rate? Do you need to seek the assistance of a credit counselor if your debts are too much to handle?
• Develop and implement a game plan – Once you have your debts in front of you, it’s time to come up with a realistic solution for paying them off. Don’t beat yourself up over the length of time it will take to pay them off; simply focus on developing and implementing a game plan. There’s nothing quite as empowering as taking control of your finances and not letting them take control of you.
• Make your life easier – If you need to get better control over your finances, consider the many ways in which you can make this process easier. Set up bill payments through your bank; consider setting up automatic bill payments; and go paperless by eliminating paper statements.

Americans are known for many things, and running up a considerable amount of debt is one of them. Creditors are banking on this because it means you may want to consider protecting your finances and your credit if something catastrophic happens. And that’s where credit card debt protection comes into play.

Typically, credit card debt protection programs are like insurance policies on the debt you carry from month to month. They are designed to pay your credit card bill should you lose your job or experience some other type of financial hardship. However, this protection doesn’t come free, so it’s up to you to decide whether the cost of a credit card debt protection plan is worth your time and money.

Here’s what we know:

• In 2009, credit card consumers paid out more than $2.4 billion for debt protection products to the nine largest credit card issuers.
• For every dollar you pay to the credit card company for debt protection, you receive about 21 cents in benefits. The credit card company, other hand, earns about 55 cents out of every dollar you pay in debt protection fees.
• Monthly fees for debt protection programs range anywhere from 85 cents to $1.35 for every $100 of debt. To put this into perspective, expect to pay between $500 and $800 per year for debt protection for a $5,000 balance.
• Premiums paid out by consumers for debt protection vary widely, as states oversee this type of insurance.

Debt protection products usually work by suspending monthly, minimum payments or even cancelling out a balance due to illness, unemployment or death of the cardholder.

The bottom line is that the value of these products is difficult to measure. Some advocacy groups, like the Center for Economic Justice, criticizes the sheer cost of these insurance policies and state that many cardholders could be ineligible to receive benefits if they ever should need them. For example, an individual working part-time who loses his or her job will be unlikely able to claim benefits.

Your best route to take when deciding whether a debt protection insurance product is right for you is to carefully read and review all of the information before signing on.

Here is what you need to do to manage your credit card obligations so your credit card is working for you, and not the other way around:

• Track your spending using your credit card’s online tools. The very best way to ensure your credit card spending does not get the better of you is to make it a habit of checking your credit card spending and your balance at least once a week. Often times, our credit card balances get quickly out of hand because we simply lose track of our spending over the course of a month. Take advantage of the conveniences of the Internet and mark it in your calendar to check your spending on a weekly basis.
• Always thoroughly review your spending. In addition to keeping track of your balance, it is important to pay close attention to the purchases. The best way to make sure everything is correct on your credit card statement is to keep your credit card receipts and compare them with your monthly statement. Doing so will allow you ensure there are no discrepancies or errors on your statement, and will also allow you to immediately spot any unauthorized charges on your credit.
• Keep a monthly budget. It is always much easier to manage your credit card expenditures when you have a sensible, working budget. In short, you will be able to easily pay off your credit card balance each month when you have the funds set aside to do so.
• Do your best to avoid carrying over credit card balances. Although there may very well be times when you are unable to pay off your credit card balance, do your best to only spend what you can afford to pay off each month. It just doesn’t make sense to pay finance charges to your credit card company if you don’t have to.

Equifax recently reported that, for some households, credit card debt burden equaled an astounding 17 percent of their income. What’s even more amazing is this total doesn’t include debt from store credit cards.

Experian has also analyzed consumer spending habits and found that the average consumer now holds an average of $4,200 in credit card debt. One bright light to this number is that it is four percent less than the year before. There are some cities, however, where credit card debt is far above the national average.

Here is a list of the top five U.S. cities with the highest consumer credit card debt:

1. San Antonio, Texas – Residents of San Antonio are now carrying, on average, $5,177 in credit card debt; that’s more than 20 percent above the national average. Jeanie Wyatt, CEO of the San Antonio-based firm of South Texas Money Management, explains that San Antonio’s debt problems are closely linked to the fact that this city is largely comprised of the working-class, and that wages earned in San Antonio are often less than other parts of the country.
2. Jacksonville, Florida – Residents of Jacksonville owe an average of $5,115 on credit cards. In addition, this city has a lower-than-average credit score. Jacksonville’s credit card debt problems come as no surprise, as this area of the country has been deeply affected by the real estate meltdown and mortgage problems.
3. Atlanta, Georgia – If you live in Atlanta, chances are your credit card debt is around $4,960. Atlanta has suffered from the housing market collapse, leading many to spend on credit cards out of “economic desperation.”
4. Honolulu, Hawaii – Honolulu’s debt average is about $4,939 per person, which is 15 percent higher than the national average.
5. Dallas, Texas – Dallas residents are now carrying an average of $4,936 in credit card debt, which is 15 percent higher than the national average. A bright spot in Dallas’ number, however, is that it is four and a half percent lower than last year’s numbers.

The following list of clues will help you identify if it’s time to re-evaluate your finances:

1. You immediately begin to feel stressed when you head to the mailbox – If you get heart palpitations every time you walk toward the mailbox, it may be time to re-evaluate your finances. If you delay opening your mail, or if you fail to even open your credit card statement because you can’t bear to look at the balance, it is definitely time to re-evaluate your finances. Putting your head in the sand, so to speak, accomplishes nothing when it comes to handling your finances; and in many cases, it simply makes matters worse. It’s time to face your financial demons head-on so you can begin heading down a better financial past.
2. You are having difficulty paying more than the minimum payment on your credit cards – Credit cards are a great financial tool if used correctly; if used incorrectly, they can wreak havoc in your life. If you are struggling to pay more than the minimum payment on your credit card, it’s time to either re-evaluate your spending, your budget, or both as to avoid a vicious cycle of hefty finance charges and low, monthly payments.
3. You find yourself using credit cards to handle monthly bills due to a lack of cash – A sure sign of a financial problem starts when you begin paying your monthly bills with your credit card because you have mismanaged your cash flow. Credit card use should be a convenience, not a necessity.
4. Your credit card is near its limit – If your credit card is nearing its credit limit, your spending may be out of control. Pay close attention to your credit card activity over the past six months so you can determine where you went wrong in terms of spending.

But when it comes to our credit cards, paying a bill late can result in serious consequences. If you think because you’ve made payments on time for what seems like forever, and you have a good credit score, that you don’t need to worry about a missed payment or two, you couldn’t be more wrong.

In fact, credit card companies are now coming down hard on individuals who miss even one payment.

Late Payment Fee

Failing to pay your credit card bill can result in a missed or late payment fee (which can range anywhere from $15 to $35), accrued interest charges, and even a higher interest rate.

Penalty APRs

Although the CARD Act has made credit card companies provide customers with 45 days’ notice of a rate increase, it doesn’t stop them from raising interest rates and penalizing you with the penalty APR – which could be as high as 29.99 percent.

Lower Credit Score

In addition to putting a damper on your interest rate, a missed payment could mean a lower credit score. A credit card issuer can report your missed or late payment to the credit reporting agencies, thereby bruising your credit score.

Lost Points

If you have a rewards credit card and you fail to pay the minimum payment, you could lose any points or rewards you earned during that billing cycle.

How to Avoid the Pitfalls of Late Payments

If you want to avoid a late or missed payment you can set up automatic bill payments with your credit card or bank. This feature will automatically make a payment each month on your chosen date, thereby preventing a missed or late payment. In addition, you may also choose to pay your credit card bill as soon as the bill arrives, thereby eliminating the chance that you might forget about it. Finally, you can set up reminders through your smart phone or other electronic organizer.