With the economic downturn, everyone is feeling the effects in their daily lives. For some, however, having credit card debt can be the straw that breaks the camel’s back. If this applies to you, here are five tips to reduce credit card debt.
1. Pay down your debt. Use the “snowball” method, which works as follows: Make a list of your credit cards and place the card with the highest rate of interest first, then the second highest rate, and so on. For the card with the highest rate, add an additional $25, $50, or $100 (whatever you can afford) to the minimum payment due. This will be the amount you pay every month.
When the first credit card is paid off, apply the same amount you paid for the first card to the second card (add additional money if you can). Once the second credit card is paid, move on to the third card and so forth until all debts are paid.
2. Keep one credit card (for emergencies only) and leave it at home in a safe place. Pay for anything you buy with cash. If you can’t afford it; don’t buy it.
3. Call the credit card companies and ask to have your interest rate reduced.
4. If you need assistance, seek out a certified financial counselor who can help you come up with a plan to pay off your debt.
5. To avoid bankruptcy, you may wish to take out a home equity loan that will enable you to pay off all debts you have incurred. Before you decide if this is right for you, determine if you can afford to make the payments without the loan by taking a closer look at your household budget to find an item you can either eliminate or reduce.
The crippling effect of credit card debt has grown to a staggering amount in this country. We are a nation of debt, and the credit crunch has forced banks to freeze lending to other banks and consumers.
It will take a great amount of sacrifice and fortitude to withstand the days ahead. However, if you start now you can alleviate some of the stress and worry by cutting up all but one credit card and begin paying down your debt. It is no longer a choice.
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Great advice. If people would follow this we wouldn’t be in the financial mess we are in now.
Great post, thanks for the info