Most Americans have a problem with credit card debt. In fact, many studies have shown the average American carrier more then $8000 in credit card debt. This is a real big problem. However, there are ways to reduce your credit card debt without pulling all of your hair out. Below are some steps to reducing your credit card debt that you can pursue.
Balance Transfers/Switching Cards
One way to reduce your debt is by transferring your balance to a different company that has a lower interest rate then you currently have. As you probably know, credit card companies make their money from the interest you pay which can usually be up to 25% or more. Many credit card providers have introductory periods where the interest rate is 0% or close to 0%. This introductory period can be anywhere from 3 months to 1 year. This is a smart move because if you can prevent interest from accumulating you can pay off your credit card in a shorter amount of time. If you cannot pay it off during the introductory period from a new card, then you might want to think about completing the process again.
This step is obvious but you must develop self-discipline. In other words, another way to reduce credit card debt is to become very frugal and not spend unless you absolutely have to. Some experts would say to even go as far as cutting up your card so that don't use it anymore or put in a safe place other then your wallet or purse. Try to use what money you do have instead of borrowing more which just adds to the problem. Use your debit card at all costs if possible.
Call Your Credit Card Company And Negotiate A Lower Interest Rate!
Sometimes even calling your credit card company and asking for a lower interest rate works. Tell them that if they don't reduce your credit card interest rate you are going to switch to another credit card company. This negotiation tactic is worth a shot, and remember, you have nothing to lose by trying it.
Pay More Than the Minimal Amount Each Month/Use Savings
If possible, always pay more then the minimal amount each month. This act alone will save you from having to pay tons of interest. The credit card companies want you to pay the minimum amount so that they continue to make money via interest. If it means tapping into savings then so be it. Your typical savings account will get no more then 5% interest anyway, and most credit cards will have interest rates above 5%. Therefore, if your savings interest rate is lower then your credit card interest rate, you are losing money by the second.
Create A Budget
This step may seem obvious to many people as well. This is a great way to attack your credit card debt because you know how much money at minimum you need to spend for basic living expenses and you can figure out how much you can allocate to paying off your credit card debt a month. Using your computer (spreadsheet) is a great way to calculate and see how much you can allocate per month to your debt. Furthermore, a budget is great way to see how long it will take you pay off your credit card debt so you are pretty certain of the date when you will become debt free.
Contact A Credit Counseling Company
Credit counseling companies are a great way to attack credit card debt as they will sometimes enroll you in a debt management program. These debt management programs are specifically designed for your financial situation and can last anywhere from 24 months to 5 years. Debt experts will analyze your current debt situation, help you setup a budget, and then work with creditors to negotiate with creditors for you. Negotiation with creditors can involve such things as reducing your credit card debt interest rate or other bills with interest, waiving late fees, and other fees, as well the possibility of reducing the total amount you owe. Moreover, they can stop the collection calls, lower your monthly payments, consolidate your debt to one monthly payment, help you avoid bankruptcy and help you save hundreds on interest! Many debt consolidation expert companies also provide counseling as part of the debt reduction program to make you stay on track in becoming debt free. Here is a link to get started by having these debt management companies compete for you business free of charge with no obligation.
Obtain a Debt Consolidation Loan
If you own a home or some asset, then obtaining a debt consolidation loan can be a smart move. Any debts you have that are secured (mortgage, boat loan, car loan) can be used as collateral to obtain a personal loan, refinance loan, or home equity loan. There are many benefits to a debt consolidation loan. Debt consolidation loans usually have a lower interest rate than your credit card interest rate. Therefore, you can take out another loan at a lower interest rate to pay off your higher interest rate debt (Your Credit Card Debt!!). There are many benefits. First, you can end those debts that carry high interest (credit card debts). Second, you can consolidate your debt into an affordable low monthly payment. Third, you can improve your credit score and prevent the degradation of your credit score. Here is a link to get started in pursuing a debt consolidation. Most importantly, by filling out the form from this link you will have companies compete free of charge for your business so you get the best deal.