5 Ways to Help Reduce Credit Card Debt
It’s very easy to get into trouble with credit cards and not so easy to get out of it. Every year, more and more people are wracking up tons of debt and maxing out their credit cards to get by. Credit cards can be a great tool in the world of finances, but only if they are used responsibly. Here are five ways to help you reduce your credit card debt and keep it managed in the future:
1. Don’t just pay the minimum – Many credit cards are attached to interest rates and fees that make them near impossible to pay off if you only send the minimum payment. (Also remember that swiping your card in the wrong place can add to your purchase as some vendors will charge you an extra fee for using their credit card processing services.) Even if you are only able to focus on paying down one card at a time, make sure you pay at least just a little more than the minimum payment on each credit card. Even paying just one dollar over on each payment will boost your credit score and help in the long run.
2. Evaluate your spending habits – Take a long, hard look at what you spend money on every month. Are you charging a $5 cup of coffee to your credit card every morning? Doing your grocery shopping without any semblance of a list or plan? Still have clothing in your closet with the tags on it, but you’re off to the mall anyway? Be realistic and get tough with yourself. Buy a reusable coffee mug and make your own coffee every morning. Make a list of what you really need when you go to the grocery store, and try not to deviate from it with impulse items. And if you have clothes you haven’t even worn yet… it’s a no brainer, but don’t buy something new just because! When you really look at what you’re spending each month, you may find that what you thought you “needed,” you really just “wanted.”
3. Don’t be afraid to utilize balance transfers – Call all of your credit card companies to request lowered interest rates and ask for information on balance transfers. Make sure you get all the info on fees, etc. Then, plan accordingly and move your debt around to reduce the interest you pay. Over time, you will see a very obvious savings. (Always make sure the merchant account services are not charging too high of a transfer fee.)
4. Throw extra income at credit cards, not new purchases – If you ever find yourself with a little extra cash, remember that you have other responsibilities far more important than a new stereo system. We all need a little retail therapy at times, but before you go out and do that, remember that it’s probably one of the things that got you into this mess in the first place. Treat yourself once you’ve made progress… and do it with cash.
5. Tell people about your plans to reduce your debt – This is probably one of the most important things to do that people rarely follow through with. For many, money troubles are embarrassing and they want to keep them private. You don’t need to shout from the mountaintops that you’re $30,000 in debt though. Just make it clear to friends and family that you are focusing on eliminating some debt and need to curb your spending for a while. Otherwise, you’ll drive yourself crazy trying to come up with various excuses as to why you can’t go to that fancy restaurant or join friends on a lavish cruise.
Do you have any tips that have helped you reduce your credit card debt? Share them with us by commenting below!