Your credit card debt might look innocent enough today. The median balance for college students is $1,600, according to Nellie Mae's most recent National Student Loan Survey.
But between the ages 25 and 34, the average balance mushrooms to $4,088, according to a 2004 report from Demos, a public-policy group in New York. Combined with fresh car loans, mortgages and student loans, that debt level easily can strain a young household's budget.
Feeling queasy? Interest rates on credit cards average about 13 percent, so your first priority should be to pay off the plastic.
Just covering the 2 percent minimum on a $4,000 debt, without spending another dime, would cost $4,360 in interest. (Minimum payments on many credit cards are doubling to 4 percent. At that rate, it would cost $1,436 in interest.)
But you don't need a lottery windfall to get to zero. Creditors, which prefer to make back the money they've lent instead of losing it to bankruptcy, often are willing to negotiate your repayment. Here's what to do:
Write a detailed budget. Consider all your monthly bills and necessary expenses and then look for areas where you realistically can cut back.
Call your credit issuers and ask for a lower interest rate. Explain that you've been a cardholder for X amount of time but have received lower-rate offers in the mail. To stay with the current card, you'd like a more competitive rate.
If they say no, ask to talk with a supervisor, said Scott Bilker, author of Talk Your Way Out of Credit Card Debt (Press One Publishing, $20). "And if they claim a supervisor can't reduce your rate say, 'I still want to talk with him.' "
You're more likely to secure a lower rate if you've never been delinquent or paid late. Similarly, credit-card issuers often agree to waive a late fee or annual fee for customers with a good payment history.
If after these steps you're still struggling with the debt load, you may want to meet with a credit counselor. A counselor will help you sort through budgeting dilemmas.
"They're an impartial resource," said Cate Williams, vice president of Money Management International, a nonprofit credit counseling agency.
If needed, you'll be enrolled in a debt-management program, in which the counselor works with your creditors to reduce interest rates - to about 9 percent on average - and remove late fees.
You also pay your monthly credit-card bills with one check to the agency. In turn, the agency disburses the appropriate cash to your creditors.
This program is a significant commitment. It lasts from three to five years. Your accounts effectively will be closed, which can lower your credit score, and you can't open new lines of credit.
Also, there are fees. Your initial session with a counselor typically is free or costs less than $35. With a debt-management program, you'll pay an enrollment fee of around $50 and a monthly fee of $25 to $35.
In recent years, the Federal Trade Commission has accused some credit counseling services of unscrupulous practices, such as charging undisclosed fees or failing to teach consumers how to manage debt, despite claims otherwise.
To find a reputable shop, Travis Plunkett, legislative director of the Consumer Federation of America, recommends choosing a nonprofit agency but to "look beyond the nonprofit status."
Ask friends and colleagues for recommendations and check with the Better Business Bureau or state regulators for complaints.
Avoid agencies that pressure you to enroll in a debt-management program without first going over your budget extensively or offering guidance on money management.
Check whether a credit counseling service you are considering is accredited by the National Foundation for Credit Counseling (www.nfcc.org) or the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org).
And, finally, make sure the fees are reasonable (as listed above). Credit counseling is supposed to help eliminate your debt, not contribute to it.
E-mail Carolyn Bigda at email@example.com.