Reduce Credit Card Debt

Reduce Credit Card Debt

How to reduce credit card debt is a question that is asked more nowadays than at any other time in history. Millions of people are currently dealing with thousands of dollars worth of personal credit card debt and knowing exactly how to deal with this problem is something many need help with.

These SEVEN simple steps will eventually eliminate your debt completely.

• Account for spending
• Reduce unnecessary spending
• Write down each Credit card level and APR.
• Spend less on necessities
• 0% APR balance transfers
• Credit Card Consolidation Loans
• Cut up your cards

Step 1.
Analyze your credit card statements and identify those little indulgences and needless impulse buys that have, at the end of the day, got you in this mess.

Step 2.
Once you have identified what you have been wasting your cash on, you need to eliminate them from your spending. You will never reduce your debt if you do not eliminate unnecessary spending.

Step 3.
OK, so you SHOULD now have stopped spending money on those unnecessary items; what you now need to do is list every credit card balance in order of size and APR. There is no hard and fast set of rules to say how you should target repaying your debt but here are three ways.

I. Target the card with the highest APR first; logically this makes sense as you will be getting rid of the debt that increases without spending!

II. Look to pay off the card with the smallest balance first: Psychologically this is a great method as every time you pay off a card the buzz you receive is amazing.

III. Pay each card off proportionately each repayment period. Although this seems to be the fairest way to clear your debt, it may be some time before you see any one balance being cleared.

Step 4.
Step 4 is all about cutting back some more. You should have stopped spending on unnecessary items or using the local restaurant as your personal dining room but, you do need to cut back even further.

Look at your grocery bill, your usage of utilities; always opt for a cheaper alternative. Feeling cold? Stick on a jumper, not the heating! Get a bus not a cab. All simple things that will help save you heaps of cash that can then go towards paying off your credit card balances.

Step 5.
You may already have used them but if not there is something that may be worth considering. In the battle to steal customers from one another the credit card companies were all offering the 0% APR balance transfer at one time. Although the number of offers available has decreased in recent years, they can still be found, and will buy you a period of time with no interest, in some cases up to and beyond 12 months!

Just make sure you read the small print, you don’t want to be hit with transfer charges or an astronomical interest rate at the end of your 0% period.

Step 6.
Credit Card Consolidation Loans are another option to be considered. These loans will provide you with the funds to clear your credit card debt and leave you with a single payment that is at a much lower interest rate, sounds great in theory but consider this - these loans are generally secured against your property and you will be putting your home at risk should you default, so if you can repay your credit cards using steps 1 to 5 do so.

Step 7.
Stop yourself from ever getting into this mess again by cutting up each card you pay off! If you must keep one for financial emergencies choose the one with the lowest APR.

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