How To Reduce Credit Card Debt

Why reduce credit card debt? According to the Fitch Investment Service, bad credit debts have risen to a high of $821 million. That’s the problem of banks and other lenders, right? But you still have to pay those debts on your credit card or you will never have another shot to improve your credit rating. That’s the real problem, right again?

Figuring out how you can clamber out of the black hole of credit card debt and still be able to pay those regular monthly bills and put food on the table can be overwhelming. The mater becomes a headache if you are not earning enough or you have just lost your job.

The numbers can be frightening. If you carry $20,000 on a credit card with an 18 percent interest rate and you are only able to make a minimum payment or one percent of the balance excluding the interest, you are looking at 64 years before you can pay it off. There will be more payments for late fees and other mysterious charges.

If you are still clueless how to reduce credit card debt, here is what you can do to work your credit card debt reduction. That goes without saying that you should change your lifestyle and give up those café lattes and bring those brown bags to work.

The card issuer will be willing to give you a repayment plan if you have a few thousand dollars carried on your credit cards. Even if this will mean the reduction of your credit limits, go for it. After all, you want out, not more debts, if it can be helped. Hesitating to contact your lender will only make your financial problem worse.

If you are up to your eyeballs with credit card debt and feel suicidal about the whole thing, get help from a credit counselor. After a session, you will realize that it isn’t that hopeless after all. A credit counselor will go over your finances and figure out how to help achieve a debt pay off you pay your debts within reasonable limits.

In the choice of a credit counselor, choose someone from a legitimate organization such as the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.

A legit counselor will charge a nominal fee to set up your personal debt plan. These people should be ready to help you even if you can’t afford the fee and spend an hour listening to your problems.

There are several ways to reduce credit card debt. Whatever strategy you choose, the trick is sticking to the debt plan come hell or high water. You can pay off those low balances first and shave off a little from the credit card with the highest interest rate. As you pay off those low balances, chuck those cards and concentrate on the bigger ones, those with higher Annual Percentage Rates (APR). This is the most recommended way, so that you are always working toward the goal of having less and less debt.

If you can, while you are still at it, avoid using your credit cards. Start living frugally and if you get a windfall, pay off the balances ASAP – doesn’t the thought of paying back your loan for 64 years make you cringe?