Old Credit Card Debt Can Come Back to Haunt You

Credit card debt can sometimes be like a bad penny that keeps turning up. Obviously, the only wise course of action is to pay bills promptly and never get oneself overextended. But for those who have found themselves drowning in credit card debt with no way out, this hasn't always been an option.

In cases where people have been unable to repay a credit card balance, the lending bank normally is forced to "charge off" the amount owed. The banks will usually do this after a period of time, such as after 3 – 4 months of delinquency. But this doesn't mean that the debt has been erased, by any means. It is more of an interim accounting measure on the part of the bank to reclassify the funds that appear doubtful in terms of repayment.

Credit card issuers will normally try to collect delinquent credit card balances long after the money owed has been reclassified on their books as "charged off". If these collection efforts prove to be fruitless they will sometimes settle with the card holder for some amount less than is owed. But more often they will sell delinquent balances to third party collection companies for pennies on the dollar. Banks consider this type of arrangement better than nothing in terms of repayment. And, it is these third party collectors that consumers must be wary of because they often are much more aggressive in terms of collecting payment from borrowers.

Declaring bankruptcy can normally protect a person from original creditors, but this isn't always the case if the delinquent receivables have been sold to another creditor, such as a collection agency. Consumers are finding out the hard way that past financial difficulty or indiscretion is not actually forgiven or evaded, but is now coming back to insist on resolution. These situations will only become more common as recently enacted bankruptcy reform will make it more difficult to consumers to avoid eventual debt repayment.

In favor of consumers who have declared bankruptcy is a statute of limitations after which a debt can not be legally collected, which is seven years from the date of charge-off. If collection agencies come after someone beyond this period then consumers can take legal action to have the collections stopped.

Another tactic employed by aggressive collection agencies involves the threat of reporting the card holder to the credit reporting agencies unless the amount owed is repaid. For those who have come out of bankruptcy and have rebuilt their credit, this can be a very effective ploy. But, if more than seven years have transpired since the original due date this tactic can be countered with legal action, since the statute of limitations also applies to credit bureau reporting.

So, what should a person do if confronted with aggressive collection efforts for a debt that should have been erased years ago? First, determine if the debt is legitimate. Sometimes collection agencies have inaccurate information and use intimidation to drive their revenue despite the consumer not recognizing the origin of the amount to be repaid.

Second, if the amount is actually owed, find out how long it has been since the delinquency clock started. If beyond seven years, it is up to the consumer whether to settle up with the collection agency, since by law the clock has run out on any legal obligations.

The bottom line with credit card debt is to avoid it if possible. But, if a person finds themselves consumed by card debt (even very old credit card debt), they should use every method possible to dig themselves out of the hole. Methods include stopping new credit card spending, developing a strict budget and transferring balances to a 0% APR credit card (if the person's credit situation will allow them to qualify) or a low interest balance transfer credit card. No hole is too deep to get out of, so with a strong dose of self discipline and a plan of attack, a new financial future can be on the horizon.

Consumer Debt Trends

Consumer debt in this country has been on the rise since the 1980's. And, it's no coincidence that this was the beginning of the rapid expansion of credit card use in America. Banks and credit card companies figured out ways to harness the marketing power of direct mail and other forms of mass media to begin promoting their low rate credit cards and create demand.

This era also saw the beginning of the shift of consumer spending from cash and check to credit cards. Just within the last year, according to the Federal Reserve, use of plastic for payments surpassed that of cash and check.

Debit card usage, both bank-issued debit cards and prepaid debit cards, has exploded in recent years. This growth has even eclipsed the growth rates of credit cards. This phenomenon is being driven by two factors. One is the convenience offered by debit cards over writing checks or using cash from an ATM. The other is a backlash to the fear of getting into too much credit card debt.

And, this fear is probably well justified, since a majority of Americans carry substantial credit card debt from month to month. In fact, the average American household has over $9,000 in credit card debt. In order to reduce credit card debt or to become debt free, Americans need to fundamentally change the way they view and use credit cards.

As with debit cards, most people think they are spending their own money when they pull out a credit card for a purchase. But, in reality, they are borrowing money for a short term in order to make that purchase. They should almost think of the process in terms of turning to the person behind them in line and asking to borrow the money.

Using any form of payment other than cash creates a type of psychological barrier to the actual sacrifice needed to make a purchase. This is why many financial experts recommend that people in extreme credit card debt stop using plastic altogether, or at least until they can eliminate credit card debt and become debt free.

Listed below is a graph which illustrates the overall trend in U.S. consumer debt as a percentage of disposable income over the past five years. While consumer debt has increased dramatically over the past decade, the level of debt service has decreased. This indicates that, on average, Americans are paying down less of their credit card debt since 2002 than in previous years.

Consumer debt is only projected to continue rising, unfortunately. This trend is being reflected in the U.S. savings rates, which have become negative for the first time in our nation's history.

To become debt free consumers should stop adding to credit card debt and seek to lower the cost of borrowed funds. A balance transfer to a 0% APR credit card can be a good start, but only if the free interest period is utilized to pay down the outstanding principal.

You Might be Headed for Credit Card Debt Trouble If...

There is good debt (such as student loans and home loans) and bad debt (credit card debt, high-interest loans). There is also an acceptable level of consumer debt, as well as just plain too much debt. You could find yourself on the path towards having too much credit card debt if you find yourself in any of the following situations:

• Your wallet contains more credit cards than photos of your kids, grandchildren, boyfriend, girlfriend, spouse, pets, etc.
• You and your credit collector are on a first-name basis and exchange birthday, anniversary, and holiday cards.
• Your mailman sues you for the medical costs associated with his lower back pain after carrying around your credit card statements.
• You have moved residences at least once to keep a step ahead of your creditors.
• Your pay more in interest charges than you do in taxes.
• You start to think the national debt doesn't seem so bad.
• One month of your interest payments could pay for that dream vacation to Hawaii you've always wanted to go on.
• You forget which credit card has a balance that will cover the purchase you are about to make.
• You have to hand the merchant more than two credit cards before your purchase is approved.
• Your credit reports takes three days to download off the Internet.
• You are surprised to see someone else's credit card is one you don't already have.

If these situations sound familiar, then you should take steps to pay off your credit card debt and perhaps cancel some of your many credit cards. Also, you may want to consider a balance transfer to a low interest credit card.

Paying Off Credit Card Debt Vs. Funding Your 401k

When we are presented with two options that both seem good, it can be tough to make a decision. This is true in the case of the choice between using extra money to pay off credit card debt or to invest in a 401k retirement program -- both of which are recommended by financial advisers.

In an ideal situation, it would be possible to both pay off credit card debt and contribute the maximum amount to an employer's 401k retirement fund. But for most of us, we have to make the most of a limited amount of money. So for Americans faced with the decision between paying off credit card debt and funding their 401k plan, how should we best put our money to work?

First, consider your credit card debt. According to the Federal Reserve, the average interest rate on credit card accounts is nearing 15%. That is very costly, especially since credit card interest payments are not tax-deductible. So with most credit cards charging 15% interest on whatever balance is owed, paying off credit card debt is equal to earning a guaranteed 15% return on your money.

Next, consider your 401k plan. Many employers will contribute $0.50 for every dollar you put into the plan, for a guaranteed 50% return on your investment. Additionally, the money you invest in your 401k plan grows tax-free until you take it out. That is a major difference from the money used on a credit card, which gets no special tax treatment.

Based on this logic, it looks like the 401k, with its tax-advantaged 50% return, trumps paying off your credit card debt and its regular "return" of 15%. However, when you consider that a 50% employer match on your 401k investment is a one-time deal, while 15% interest on a credit card balance in ongoing, it becomes clear that you should first pay off the credit card debt.

But in order for the math to work in your favor, after paying off the credit card debt, you have to make sure not to run up a balance again in the future. Additionally, once you have erased your credit card debt, you should contribute the full amount to your 401k.

It is almost always a good idea to avoid carrying a credit card balance. But what if you feel you should begin contributing to your 401k immediately, and therefore have to revolve a credit card balance to do so? Could this be a better option for you than paying down your entire credit card balance first?

To do the math, imagine you have $150 each month in extra money as well as a $4,000 credit card balance racking up 15% interest. In this case, the minimum credit card payment each month would be about $90.

If you choose to first get rid of your credit card debt, by using the full $150 each month to pay down your balance, you could eliminate the credit card debt in 32 months at a cost of $756 in total interest. After your credit card balance had been reduced to zero, you could then invest the entire $150 into your 401k each month. With an employer match of 50% and an annual 8% return, your 401k would reach $5,410 in 54 months -- the same time frame we will consider below.

However, if you decide to begin contributing immediately to your 401k, putting $100 a month toward paying off your credit card debt and the other $50 into your retirement plan, it will take those 54 months to eliminate your credit card debt at a cost of $1,341 in interest. With the employer match and an 8% annual return, you would have $4,890.

By first paying off your credit card debt, it would be erased almost two years sooner than by trying to use money for both the debt and the 401k simultaneously. Meanwhile, your 401k would grow by an additional $500 over the 54 months. Therefore, paying off your credit card debt first, then investing fully in your 401k, wins out.

Of course, since a credit card bill is paid with after-tax dollars while a 401k is funded with pretax dollars, a truly real-world comparison must include the impact from taxes.

As an example, if you are in the 25% federal tax bracket, you need to earn $200 to net $150 after taxes to pay off your credit card debt. But if you decide to tackle the debt while also investing in the 401k as outlined above, you need to earn just $183 for the $100 after taxes and the $50 pretax. The difference could then be also invested in your retirement account.

Using this approach of both paying down the credit card debt and investing in the 401k, you would have $6,508 at the end of the multitasking period. But if you first paid off your credit card debt, you would then have more to contribute to a 401k, which would in turn yield $7,188.

Therefore, when given the option, it makes financial sense to first tackle your credit card debt completely before then moving on to contribute the maximum amount to your 401k plan. One way to quickly reduce credit card interest payments (which can save you both time and money) is to apply for a balance transfer credit card with a lower APR than the credit card you are currently using. Lower interest rates mean smaller credit card bills, which in turn mean less time paying off a credit card balance and an earlier start contributing to a 401k.

In closing, to truly make the most of your money, employ good financial behavior. Always pay off your credit card balance, and be sure to take advantage of a 401k plan that offers an employer match.

Simple Rules Can Help Prevent Credit Card Debt

Credit Counseling Service has one simple consideration: whether you can manage your credit card properly.

As the CEO of the nonprofit group that helps consumers break free from debt, Richard Skaggs has seen a lot -- including individuals carrying as much as $200,000 in credit card debt.

However, the Consumer Credit Counseling Service's chief executive said following some easy steps can keep consumers from falling into the pit that is credit card debt.

Skaggs urges credit card users to establish a budget and then to follow that budget exactly. In other words, don't be tempted to charge that plasma TV to your credit card on a whim when you haven't budgeted for it this month.

Also, he tells consumers not to carry a balance on their credit cards for longer than six months. Skaggs explains that beyond that point, the compounding of simple interest can produce a very expensive balance to pay off. If it helps, think of your credit card balance as a snowball that grows larger as it rolls downhill.

Furthermore, reward credit card holders might end up spending more than the reward itself is worth if they don't pay attention to the fees and interest associated with their credit card. Visitors to CreditCardXPO.com can view such information for a specific credit card by clicking on the "apply here" button, then selecting an underlined link for "pricing and terms" or "terms and conditions."

The CEO also recommends looking for a low interest credit card if your credit card's interest rate is excessive. Still, he tells consumers to be aware of the normal interest rates on any balance transfer credit cards once the low introductory rates expire.

Overall, Skaggs stresses the importance of consumers taking responsibility and managing their finances.

And, should credit card holders get in over their heads, many card issuers will work with customers who take the initiative to call with the goal of working out a payment plan.

Repairing Credit Card Debt

Having trouble paying your bills? Getting notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car? Repairing credit card debt isn't as hard as you may think.

You're not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming, but often can be overcome. The fact of the matter is that your financial situation doesn't have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self Help

Developing a Budget: The first step toward taking control of your financial situation is to do a realistic assessment of how much money comes in and how much money you spend. Start by listing your income from all sources. Then, list your "fixed" expenses-those that are the same each month-such as your mortgage payments or your rent, car payments, or insurance premiums. Next, list the expenses that vary, such as entertainment, recreation, or clothing. Writing down all your expenses-even those that seem insignificant-is a helpful way to track your spending patterns, identify the expenses that are necessary, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library has information about budgeting and money management techniques. Low cost budget counseling services that can help you analyze your income and expenses and develop budget and spending plans also are available in most communities. Check your Yellow Pages or contact your local bank or consumer protection office for information about them. In addition, many universities, military bases, credit unions, and housing authorities operate nonprofit counseling programs.

Contacting Your Creditors: Contact your creditors immediately if you are having trouble making ends meet. Tell them why it's difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don't wait until your accounts have been turned over to a debt collector. At that point, the creditors have given up on you.

Dealing with Debt Collectors: The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. It states:

• A debt collector may not call you between 8 A.M. to 9 P.M.
• A debt collector may not call you at work if the collector knows that your employer doesn't approve of the calls.
• Collectors may not harass you, make false statements, or use unfair practices when they try to collect a debt.
• Debt collectors must honor a written request from you to cease further contact.

Credit Counseling

If you aren't disciplined enough to create a workable budget and stick to it, can't work out a repayment plan with your creditors, or can't keep track of mounting bills, consider contacting a credit counseling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable organization. In these plans, you deposit money each month with the credit counseling service. Your deposits are used to pay your creditors according to a payment schedule developed by the counselor. As part of the repayment plan, you may have to agree not to apply for-or use-any additional credit while you're participating in the program.

A successful repayment plan requires you to make regular, timely payments, and could take 48 months or longer to complete. Ask the credit counseling service for an estimate of the time it will take to complete the plan. Some credit counseling services charge little or nothing for managing the plan; others charge a monthly fee that could add up to a significant charge over time. Some credit counseling services are funded, in part, by contributions from creditors.

While a debt repayment plan can eliminate much of the stress that comes from dealing with creditors and overdue bills, it does not mean you can forget about your debts. You still are responsible for paying any creditors whose debts are not included in the plan. You are responsible for reviewing monthly statements from your creditors to make sure your payments have been received. If your repayment plan depends on your creditors agreeing to lower or eliminate interest and finance charges, or waive late fees, you are responsible for making sure these concessions are reflected on your statements.

A debt repayment plan does not erase your credit history. Under the Fair Credit Reporting Act, accurate information about your accounts can stay on your credit report for up to seven years. In addition, your creditors will continue to report information about accounts that are handled through a debt repayment plan. For example, creditors may report that an account is in financial counseling, that payments may have been late or missed altogether, or that there are write-offs or other concessions. A demonstrated pattern of timely payments will help you obtain credit in the future.

Auto and Home Loans: Debt repayment plans usually cover unsecured debt. Your auto and home loan, which are considered secured debt, may not be included. You must continue to make payments to these creditors directly.

Most automobile financing agreements allow a creditor to repossess your car any time you're in default. No notice is required. If your car is repossessed, you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. If you can't do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You would avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you're acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who's having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a housing counseling agency near you.

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Think carefully before taking this on. These loans require your home as collateral. If you can't make the payments-or if the payments are late-you could lose your home.

The costs of these consolidation loans can add up. In addition to interest on the loan, you pay "points." Typically, one point is equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy

Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, making it difficult to acquire credit, buy a home, get life insurance, or sometimes get a job. However, it is a legal procedure that offers a fresh start for people who can't satisfy their debts. Individuals who follow the bankruptcy rules receive a discharge-a court order that says they do not have to repay certain debts.

There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. The current fees for seeking bankruptcy relief are $160: a filing fee of $130 and an administrative fee of $30. Attorney fees are additional.

Chapter 13 allows persons with a steady income to keep property, like a mortgaged house or a car, that they otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off a default during a three-to-five-year period, rather than surrender any property. After you have made all payments under the plan, you receive a discharge of your debts.

Known as straight bankruptcy, Chapter 7 involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools and basic household furnishings. Some of your property may be sold by a court-appointed official-a trustee-or turned over to your creditors. You can receive a discharge of your debts through Chapter 7 only once every six years.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

Damage Control

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. Be cautious. Before you do business with any company, check it out with your local consumer protection agency or the Better Business Bureau in the company's location.

Some businesses that offer debt counseling and reorganization plans may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing either to explain certain costs or to mention that you're signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a Chapter 13 bankruptcy, tell you everything that's involved, or help you through what can be a complex and lengthy legal process.

In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan-or even represent that it is likely. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan.

You should also avoid credit repair clinics. Companies coast to coast appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. They don't deliver. What's more, they can't deliver: They can't do anything for you that you can't do for yourself. After you pay them hundreds-or even thousands-of dollars in up-front fees, they can do nothing to improve your credit report. Indeed, many simply vanish with your money. Only time and a conscientious effort to repay your debts will improve your credit report.

If you're thinking about getting help to stabilize your financial situation, be cautious. Find out what services the business provides and what it costs. Don't rely on oral promises. Get everything in writing. Check out any company with your local consumer protection office and the Better Business Bureau in the company's location. They may be able to tell you whether other consumers have registered complaints about the business.

Four Ways Not to Get Out of Credit Card Debt

If you are up to your chin in credit card debt, you know that it's an unpleasant feeling. Getting out of this situation and becoming debt free is definitely advised and is a prudent course of action. However, as with any type of remedy, there are good ways and bad ways to go about the process. And, the bad ways are often dressed up as a quick fix and often can cause more problems than they fix.

Below are four common, but rather ill-advised ways often pitched to consumers (or represent things consumers resort to) in order to eliminate credit card debt and become debt free:

1. Get a quick home equity loan and pay off everything! Ah, if it were only that simple. Yes, home equity loans can be relatively fast compared to a full-blown mortgage loan, but there is a price to pay. Especially, in terms of origination fees, points and other costs that usually aren't disclosed until you are well into the process. And, this isn't the real reason it's a bad idea to go this route to clear your credit card debt. The real reason is that it's a crazy idea to put your house on the line in order to deal with the symptoms of a problem when the real problem is one of lack of discipline. If you don't deal with the underlying problem of living within your means you will end up right back where you started, but this time you can add the second mortgage payment to the list of bills you have to pay.
2. Rob your 401(K) or other retirement savings. This should obviously stand out as a particularly bad idea, since anytime you touch tax-advantaged retirement savings you get dinged twice. First, you will experience the pain of paying a 10% penalty for early withdrawal and then you will get taxed at your normal income tax rate for the amount withdrawn. For most people this will mean you only get to keep 65% of the money you withdraw to pay off credit card debt – not so good.
3. Take a cash advance on another card to pay off (or worse yet, make the minimum payments on) other credit cards. The expression "Robbing Peter to pay Paul" comes to mind with this one. For starters, taking a cash advance on a credit card is a very expensive proposition. There is normally a tasty 3% fee charged for these type advances along with very high interest rates (normally starting at 19.99%) that begin ticking away from the moment you initiate the advance. And, all the costs pale in comparison to the sheer madness of digging one hole to fill in another. Just say no to cash advances, period.
4. Get a pay-day advance against your next pay check. Finance companies love to prey on the desperate straights of the working man, but this doesn't keep it from being doubly treacherous as a method for paying off credit cards. Payday loans are often priced at between 25% and 35% APR, and carry a withering host of fees. So, can you say "bad idea"?

So, if there are so many bad routes to becoming free of credit card debt, what represents the golden path? Well, it doesn't involve a quick fix, but it can be quickly effective at changing your credit card debt situation.

The first step involves a change of attitude. You simply must stop using your existing credit cards until you can get things under control. Resolve to live on cash and checks and, more importantly, live within your means. Cutting up most of the credit cards that you used to dig your debt pit is probably advisable as well. Keep one around for emergencies, but safely tucked away in a drawer.

Once this financial bleeding has been staunched it's time to go to work on whittling down that debt. Finding a good 0% APR balance transfer credit card can be a good next step. It's important to think of this credit card as a debt consolidation loan and not even plan to put the plastic in your wallet or purse. It's simply a place to park your balances at no interest in order to begin cutting it down to size.

Then it is simply a matter of using your income to pay down this credit card debt bit by bit until it is all gone. There – that wasn't so hard, was it? Well, it does take time and effort, but all it requires is a good strategy and some time tested tactics to become debt free.

Credit Card Debt Can Weigh on Senior Citizens

Gone are the days when senior citizens avoided debt at all costs. Nowadays, credit card debt and other debt is a fact of life for many Americans enjoying their golden years. According to a recent National Consumer Law Center report, the average credit card debt for consumers between 65 and 69 now totals almost $6,000. The report states that nearly one-third of retirees describe credit card debt as a "hardship."

The are a number of reasons why senior citizens may suffer from credit card debt. Many seniors have simply adapted to a lifestyle of owing interest on their credit cards, homes, and cars.

But for too many older Americans, the problem of credit card debt stems from simply having too little savings going into retirement. Living on a fixed income, these seniors end up putting expenses on their credit cards as costs rise each year.

Medical expenses are one of the main costs that many seniors deal with. Rising medical bills force retirees to pay for prescriptions and doctor bills with a credit card.

Although older consumers still have less debt than their younger counterparts, their debt is catching up and the danger is greater. Seniors with only a few years left to work or who are already retired may find it difficult to apply credit card debt solutions that rely on increasing income or tapping assets.

Still, there are ways for the elderly to combat credit card debt. First, older consumers need to understand how just one financial misstep can result in a cycle of late fees and higher interest rates. Seniors can take action by educating themselves, starting by reading the Schumer Box provided with each credit card application that includes information such as the card's default Annual Percentage Rate, credit limit, and late fee. Websites like CreditCardXPO.com make it easy to research various credit card options. Also, seniors may want to sit in on financial workshops for their age group held by many public school districts and other local non-profit groups.

Also, create a plan before you retire. Get help creating your plan from a fee-only financial planner, who you pay by the hour, or get the financial planner to approve the plan you create on your own. Your plan will determine factors such as the age at which you can retire. It also must contain a budget for living within your means, allowing you to figure out how much discretionary income you will be left with after paying for expenses.

But be sure to expect the unexpected when it comes to golden years expenses. Costs such as health care are often unknown until later in life, which can make life on a fixed income difficult. You will want to plan as best you can for such costs, as you may have to put them on a credit card.

Separately, older Americans should consider delaying social security for as long as possible. Credit card debt and other debt is largely due to seniors' growing expenses yet fixed incomes. By delaying the start of Social Security for as long as they can, seniors will get an increased monthly payment when they do begin the program. This delay may need to be combined with working for a few more years wherein not only are assets not withdrawn, but they grow even more.

While senior credit card debt is a problem now, it is only expected to increase when high-spending baby boomers begin to retire. For those nearing retirement age and for those already there, consider getting a lower APR through use of a low interest credit card.