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Reduce Your Credit Card Debts

By plrprousers | August 10, 2009

While credit cards are a handy source of credit, relatively high interest rates mean they can be very expensive if you fall into debt. In fact, a large proportion of credit card users simply make the minimum payment each month, allowing their debt to grow and grow.

However, with a little discipline and a bit of savvy you can reverse this trend. Here are some tips on how you can slash your credit card debt and save yourself a lot of money.

Find a better rate

You may need to look for a new credit cards with a lower APR as a first step in slashing your credit card debts is reducing the amount of interest you pay so you can focus on paying the actual main debt off. The APR dictates how much interest you pay on what you owe each month and, ultimately, how quickly your debt grows.

So, find out how much you pay on your credit card and research the market to see if you can find a card with a lower interest rate. Most of the time you’ll find shopping around will find you a better deal.

In addition, many credit cards offer special introductory offers, such as no interest for six months. In some cases, these will also apply balance transfers from your current credit card so you could save yourself a lot of money in interest rate repayments, and give yourself a chance to clear some of that debt.

Check the offer details to find out any transfer fees. While many lenders offer low interest rates on transfers there is often an upfront transfer fee payable that will be added to your debts so make sure the savings really add up. Also, be sure to compare credit cards on the market to ensure that you are getting a good rate of interest after the special introductory rate expires.

Clear your debt

Unfortunately, credit card debt consolidation involves facing some hard facts. While lower interest rates and balance transfers will save you money, at some stage you will have to face facts and begin to pay off what you owe. If you have a large credit card debt it is not enough simply to make the minimum payment each month. At the very least you need to cover the interest so your debt does not continue to grow.

Ideally, though, you should be reducing the debt each month. It will take some commitment but the end result and reduction in financial stress will be well worth it. If possible use any savings you make from lower interest rates to help push down your balance owing as fast as possible.

Monitor your spending habits

Good spending habits are essential for credit card debt consolidation. If you still find yourself using your credit card to make purchases you should consider locking it away for emergencies. With a credit card in your wallet there is a constant temptation to spend – not what you need when you’re trying to get back in the black. Try switching to a Visa debit card rather than credit cards.

Avoid fees and charges

Most credit card problems come from failing to keep track of spending and treating credit card purchases differently from cash purchases as if it is not real money. Spending beyond your means is one root of the problem, but failing to adhere to the credit’s cards rules is another common pitfall. Fees and penalties for exceeding your credit limit and failing to make the minimum monthly payment can easily add up to $50 each month, so avoid these at all costs.

Get a loan

Loans with lower interest can be useful when you find yourself struggling with steep interest repayments from credit cards. It should only be considered after other options are explored but the lower interest rates for a fixed period if used well offer an opportunity to take control of finances. Some lenders may be reluctant to give you a loan considering the debt you have already built up, but if you have a clean credit rating and a decent income you should be okay.

Article by Richard of the Click 4 Group.

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