How to Reduce Credit Card Debt |
By Ashley Russell on July 19, 2011
.jpg.aspx) Credit card debt is often the worst debt to have because of the extremely high interest rates that often come with credit cards. Individuals are often trapped into these rates without really looking at what could happen if their debt gets out of hand and how much money it will cost them. Here are some helpful tips to get started on the way out of credit card debt and into a better, debt free future.
- STOP SPENDING. It is impossible to get out of credit card debt if balances on the card are still being used. Cut them up, freeze them, have a friend or spouse hide them, find some way to stop using them. Individuals who are unable to stop using their credit cards will just make it harder on themselves. If an individual is unable to stop spending, they should try to come up with a creative way to force themselves to do so, or find someone or something that can hold them accountable.
- PAY MORE THAN THE MINIMUM. Many people sign up for credit cards thinking they are the source of quick money that only requires a small amount, or minimum payment, to be paid every month. While this is true, one can save hundreds, if not thousands, by paying more than the minimum payment. This is because this lowers the amount that they pay interest on every month and also shortens the amount of months that they have to pay the interest on the balance of the card. If an individual is serious about getting out of major credit card debt he/she should pay as much as fiscally possible every month.
- EARN EXTRA CASH. Finding alternate sources of revenue to pay off credit card debt can often be an intelligent decision for an individual. Because credit cards have some of the highest interest rates around, finding ways to pay off credit card debt quickly is often the best move for people. This can include borrow at a lower interest rate, borrowing against a 401k, taking out another home equity loan, or cashing in on investments. If an individual actually does the math, the benefit of paying off credit card debt early can save them more money than having investments over the same period of time.
- MAKE A PLAN. Finally, after escaping debt, individuals need to come up with a way to stay out of debt. This can be as simple as coming up with budgets, spending plans, or other means of staying clear of debt. Credit cards can be good, but abusing them leads to large amounts of debt and problems down the road. Making a planning and sticking to it can allow individuals a guide to managing their debts and their money.
Note: If you need additional help, credit counseling may help you cut interest rates so that a lower monthly payment is possible while paying off credit card debt at a faster pace.
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