Reduce Credit Card Debt

Reduce Credit Card Debt:

If you have a serious problem with credit card debt

I am going to include some tips which helps you:

1.step 1

Make a list of all of your credit cards. Start with the smallest balance on the top of the list and the largest balance on the bottom. Also write down the minimum payment that is due on the credit card at this time. Credit card minimum payments go down as the balance goes down which increases the payoff time exponentially.
2.
Step 2

Stop using your credit cards. If you cannot pay cash for an item, do not purchase it. You will never get out of credit card debt if you do not stop using your credit cards today. You can cut them up, freeze them, or shred them – whatever you think will help you stop using them.
3.
Step 3

Pay the current minimum payment on your account, or more, every month. As the balance goes down, and subsequently the minimum payment is reduced, do not reduce your minimum payment. This is one of the easiest ways to reduce your credit card debt.
4.
Step 4

Use unexpected income to boost your credit card payment. If you receive unexpected income, instead of considering it a ticket to splurge put the total amount of the unexpected income onto your smallest credit card balance. This will help expedite the card’s payoff thus reducing your overall credit card debt load.
5.
Step 5

Roll over the minimum payment from a credit card that has been paid off onto the next credit card in your list. If you have multiple credit card accounts, as one is paid off, apply that card’s minimum payment to the payment you are making on the next account. Your total monthly credit card payment remains the same however the payments are restructured. This will also quickly expedite your credit card payoff.
6.
Step 6

Consider liquidating certain savings account to pay off your credit card debt. Do not liquid retirement funds as the penalties are prohibitive. If, however, you have a savings account earning 1% interest, use a portion of those funds to pay down on a credit card charging a higher interest rate. Do not completely liquidate your savings as you will want access to non-credit card funds in the event of an emergency.
7.
Step 7

Track your progress in a visual manner. Put a pie chart up on your refrigerator and update it every month. As you see your progress daily, you will be more motivated to stay on track to reduce your credit card debt.

Here are some things you should know about getting off the revolving credit merry-go-round:

1. Pay more than the minimum payment each month, if you ever hope to pay off your credit card debt. You must also pay on time or a finance charge will be added onto the total, creating a larger minimum payment for the next month -- and a larger finance charge added to the total again if you don't pay it.


2. Get a system for credit card debt reduction. You need your own deadline each month for paying bills. There are great software programs for keeping track of your financial records (and even writing checks). Quicken, by Intuit, is a popular money-management program. So is Microsoft's Managing Your Money.


3. Negotiate with credit card companies. The amount of credit card debt in this country has made creditors realize that if they don't want people backing down from their obligations completely (in other words, if they want to get any money back), they have to make deals, like these:

Scenario One: You tell the company's collection department that you're having financial difficulties and need to have your interest rate lowered, simple as that. They say, "What can you manage?" You tell them. (I recently got one account to lower my rate to 10 percent and cut off future finance charges.)

Scenario Two: A credit card company has offered to pay off all your old credit card debt at nine percent if you switch. Call your old companies and tell them the deal you've been offered; ask if they can do better, and go with whichever is lowest.


4. If you have a limited budget for debt reduction, write letters to each of your creditors acknowledging the situation, and tell each one when you can begin repayment. They'll appreciate your openness and likely be a lot nicer to you. You'll get yourself some breathing space (something we all need when we're dug in deep), and dealing rather than hiding will help boost your bruised self-esteem.


5. If you have a limited budget for debt repayment, write down what you can pay each creditor each month.

Here's a sample budget:

Say you owe a total of $1,000: $200 to the dentist, $400 to the doctor, and $400 to the accountant who got you out of trouble with the IRS last year. That means 40 percent of your debt is to the doctor, 40 percent is to the accountant, and 20 percent is to the dentist. If you have $50 a month for repaying debt, that means the doctor gets 40 percent of $50, which is $20, as does the accountant. The dentist gets $10, or 20 percent of $50.

A final note on dealing with creditors: Keep your cool. It will make you feel better. And remember, some creditors have been taught to be mean and nasty. Don't be intimidated. You have figured out a plan and are truly attempting to deal with your situation.