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Pay Down that Credit Card Debt
There are millions of Americans out there who have paid off heavy credit card debt, and now it’s your turn to join them. It won’t be enough, however, to just make minimum monthly payments. Here are six bigger steps you can take to get your debt under control:
Stop using your cards. The last thing you want to do with heavy credit card debt is add to it. Take all your credit cards out of your wallet or purse, and leave them at home (though you may want to keep one for emergencies — and, no, a really great sale or a cool new CD player does not qualify as an emergency).
Cut up the cards if that’s what it takes to stop using them. Some people keep their cards out of reach by freezing them in glasses of water. (I have them folded in a piece of paper, bound by tons of packing tape, and filed in a folder at work) ->not in my wallet!
Stop the flood of credit card offers. You can force credit bureaus to stop selling your name and address. Dial 1-888-5-OPTOUT to get the forms. If you’re searching for a low interest card, don’t wait for it to come to you. Visit a site like cardweb.com or bankrate.com to do your own research. this tip is great! i don’t get no-need credit card offers and I help save the planet all in one. pretty good, huh? One less tree. Love the trees. 🙂
Always pay more than the minimum. The credit card companies are not just being nice when they require only a small minimum payment on your total balance. They calculate this minimum to extend your payments for as long as possible, to boost their profits. Scrimp if you need to, and pay as much as you can above the minimum every month. cranky. although, it makes you think about savvy free entertainment that maybe available – pack a picnic, go walking at a park (exercise & enjoyment all in one), hit the beach, ride a bike, hike, read a book, check out movies at the library… What do you do?
Plan your attack. Don’t just throw yourself at a mountain of debt without preparation. How many cards do you have? What interest rates do they charge? Which have the highest balances? Write down your balances for each card, and their interest rates. (There’s space in the workbook for this.)
Generally, you’ll want to start by paying off the card with the highest rate first, and then the next highest, and so on. If you want a quick boost, go ahead and pay off a card with a low balance, just to have one paid-off card under your belt. Paying off the small card, like my Kohl’s card, is offering me that immediate gratification I need since I don’t go shopping anymore.
So, after Kohl’s (which is almost paid off – yeah!)… do I go after the Wells Fargo, JCPenney, or Best Buy? WF is a big one… JCP I do pay interest on…Best Buy, I still have 0% and am on track with those payments to have it paid off before that free finance interest offer expires… Hmmm… I think we are going to have to pay off JCP! $911.00. I still need to think of what my family’s reward is for paying Kohl’s off, too. We are thinking of a decent night out at the beach with dinner. No more than $100 reward.
Reduce the interest rate. Most credit cards charge anywhere from 16% to 20%, which is huge! But you can negotiate with your credit card company for a lower rate. Particularly if you’ve had any of your cards for a while, take advantage of being a faithful customer, and call them up to demand a lower rate. Shoot for 11% or 12%. You’d be surprised at how easy it is. Haven’t done this one yet. Although, I noticed a month ago that my Bank of America interest rate automatically went down. That is was a nice surprise!
Consolidate your debts. OK, so you know what the interest rates and outstanding balances are for each of your cards, and you’ve reduced the rate on at least some of them. Next, consider combining your debts onto one or two of your lowest rate cards, if you’ve got some credit room on them. (If you’re maxed out on those cards, then forget it.) Simply call your lender and ask how to transfer funds.
If you’re making payments well above the minimum, have reduced the interest rates on your cards, and have consolidated your debt, then you’re in good shape with your credit card debt.
Good luck with you CC debt. I thought this was useful advice to post for all to see. Spreading the word.
Question: do you pay your debt from Largest-to-Smallest or Smallest-to-Largest????
Here is my take: if we didn’t take the initiative to pay our debt down in the first place than I would have tons of interest to owe anyway for the rest of my life. So, I may technically be paying more interest starting smallest-to-largest, but I think that continuous gratification will really help to keep me on track.