Cut Credit Card Debt

Most people have too much credit card debt. We've all heard that before, right? Only now it's gotten a bit personal... right again? You personally have too much credit card debt and it's about to drive you crazy. Reduce your debt now by following these steps.

Steps

  1. Keep in mind that your creditor is probably very willing to work with you. It's in his or her best interest to have you making some payment versus no payment. So here are a couple of points to help you deal with your credit card debt.
  2. Contact your creditor and explain your situation. Ask for a lower interest rate or a repayment plan.
  3. Stop using your cards. Cut them up, freeze them in a tub of water, whatever you need to do to get them out of your wallet or purse, do it!
  4. Pay off the cards with the highest interest rate first and work from there. How do you do that? Call the companies and pin down exactly what rate you are actually paying on each card. This is called "Laddering". Alternately, you can use a "Reverse Laddering" approach, where you pay your bill with the lowest balance first, then the next lowest balance, and so on. This frees up more cash in hand to start chipping down the higher balance debts you have. This method is effective because instead of paying small chunks of money toward those high interest bills, you can throw large chunks of money at them, reducing the amount of time needed to pay them off. Also, your attitude will be better because you see the results of your progress faster, and therefore aren't discouraged as easily. You must be careful though, because sometimes the money you pay on the higher interest is more than the money you free up each month when paying off the small balances. Review your finances thoroughly, crunch the numbers, and see which method would be the most effective for your situation.
  5. Keep your chin up and have a good attitude. Millions of folks just like you have begun to cut their credit card debt by following the common sense steps outlined above. You can do it too. Good luck.



Tips

  • If you're not sure what you're asking for in the first place you might consider a reputable credit counseling service. There are many honest organizations out there whose mission is to help you work things out with your creditors.
  • Avoid the temptation to keep adding to the problem by running your debt up any higher. This is actually one of the hardest parts of cutting your credit card debt. It's like you're addicted to spending money you don't have. So go cold turkey and drop the habit.
  • You might not have thought of it because you're just naturally so polite, but it's a very good strategy to be courteous at all times when negotiating with your creditor. Be polite, but firm. Come across as one who knows what you're asking for and expect to get it.
  • Do your banking online. This lets you pay off your bills right away and focus on other more important things in life.

Warnings

  • Do not bother with third party companies that claim to eliminate personal debts as these will either increase the debt, keep the debt the same just spreading it out or affect your credit rating. These also are likely to be scams which will earn money for the owner and in most cases make you pay back further interest rates.
  • Applying for another credit card to pay off the credit card debt on your other credit card will just increase your debt.
  • Pay more than the minimum balance each month. The minimum is designed to keep you on the hook longer. The credit card companies are in this business to make a profit and want to have you paying them for years to come. Even a little extra each month makes a big difference in the long run and may cut years off your payments.
  • To avoid a lot of grief, try not to get indebted in the first place.

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Sources and Citations

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