There’s no need to tell about numerous advantages of using credit cards. They have already become an essential part of our everyday life. Owing a plastic is ten million times more convenient than carrying much cash. But, there is always a fly in the ointment. And credit card debt is definitely a fly here. As the statistics shows, current credit card debt in the US amounts to $ 360 billion. Getting into credit card debt is really easy. But when it comes to reducing it, rubbing Aladdin’s lamp won’t help.
In case you found yourself in the black hole you need to develop a strategy to get out of it. Here are a few tips, quite useful, to my mind, that will help you to eliminate credit card debt and stay out of it.
1. Try to do your best to pay off your monthly credit card balance. Of course, it will be much better if you can afford making larger payments. In this case you will eliminate your debt in a shorter time period, saving, thus, on interest. But if your financial situation won’t let you do this, at least, try to make your monthly payments in full and on time.
2. In case you cannot pay off your entire monthly balance, make a bit more that minimum payments. Making just minimum payments is not enough to terminate your debt. The thing is that your monthly minimum payment equals your APR. And it is quite clear that paying off just the amount of the interest accrued to your credit card balance you will never get out of your debt.
3. Try to stay out of making purchases with the indebted credit card. Even if it is one of the low interest credit cards. No explanations, you clearly realize this. Just a reminder.
4. Contact your credit card company and ask them to reduce your interest rate. It really works every once in a while. It is in their interests as well that you pay off your debt. They do not want you to injure their reputation. So, they might make a concession of the kind.
5. Get a balance transfer credit card with the lowest intro APR possible or with 0 interest at all. Transfer your debt to that card and try to pay off your entire outstanding balance during the promotional period. This way you won’t lose money on interest.
6. If you have several credit cards with debt on them, think of consolidating all your balances into a regular-term note. In this case you won’t have to pay several bills every month. You will make just one monthly payment on your loan with a lower interest rate. And avoid using credit cards that you have exempted from debts until you fully pay off your consolidation loan.
7. You can also get a home-equity loan and lend it to your credit card company to cover your debts. The interest on the loan of this type is considerably lower than typical credit card interest rate. So, again you save on interest.
8. Use your savings to get rid of the debt. Even those that you didn’t plan to dip into. Incurring even more debt is worse than losing money that you will be able to earn later on.
I believe that this digging-out of-credit-card-debt guide will become a good helping hand for you at your most trying moments.
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January 23rd, 2008 at 12:46 am
I always track my purchases, because it’s so easy to buy more with a credit card than you actually need. That helps me to control my debts.
January 30th, 2008 at 2:15 am
We all need a good financial education before we get a credit card. Those who read “How to avoid credit card debt” don’t need “Digging out of credit card debt”!
February 11th, 2008 at 8:05 am
I know a good way to avoid a credit card debt – don’t use a plastic!