How to Eliminate Credit Card Debt?

Last Revised on November 15, 2010

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Credit cards came into existence to help consumers. But soon it became a big money making business where companies charge high interest rates and fees while hurting users who aren’t able to pay off the debt fast enough. That’s the problem a lot of people are facing these days.

Tips for Reducing and Paying Off Credit Card Debt

Find out your needs and wants. They are two different things – needs are things you can not live without, such as food, shelter, electricity, etc. Wants are something that you want but you can also live without them, which including eating out, newspaper and magazine subscriptions, premium cable channels, etc. You need to rethink your budget and calculate how much money will have left after paying for all the important things in your household. That way you get to set aside a big chunk of your paycheck earnings to make the credit card payments. Track your spending and make sure you are not using your money for things that can wait for later time in your life.

Pay off the highest interest rate debt first. Whether your credit cards interest rates are APR or compounded monthly, your first objective should be that the credit card balance with the highest interest rate is paid in full first while making the minimum payments to the ones with lowest interest rate. And if have only one single credit card debt, try to make payments more than bare minimum. All the cash you keep in your wallet or bank checking account earn you nothing, instead use them to reduce your debts that are accumulating interests.

Make payments on time. Credit cards can get so tricky, especially when you are behind the billing due date. The interest rate on most of them are calculated right away, not next month; so if you fall short a day or two late, your bill will be higher. The best way to make payments on a timely manner is to automate the payments via your bank account. You can even open a free, no interest, bank account and set that aside only for paying credit card balances. That way you will be able to make sure you have enough money to make the payments steadily, fully and on time.

Don’t accept any new offers. Some people just have to get a credit card if they don’t have a reliable source of income, but if you have a job and steady income, stay away from tempting new credit card offers. Just use your free, no fee, bank debit cards to make new purchases.

Investigate options. Did you know that you can call your credit companies and ask for what options you can have? See if they have any payment plans that is right for you. Everybody is different, the options you got when you signed up for credit cards may not be right for everybody else not may it be right for you now. They are willing to negotiate most of the time since they want you to make the payments. If you have other loans and debts, ask these specific entities for payment options. Sometimes, even loan consolidation is a better option.

Ask for help from family and friends. As much as you hate asking for financial help from your family and friends, it could be that they want to help you that much badly. Relationships can become stronger when one party is having hard time and the other party lends their hands. If they do lend you some money, let them know when you will pay them back and explain your detailed plan. This might be the fastest way to get rid of credit card debts.

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