When it comes to having an excess of credit card debt, it is important that steps be taken prior to any serious financial trouble. Waiting too long may cause you to miss out on great deals that could really help you. Here are some practical tips on how to reduce your credit card debt to make life a little easier.
Check Your Credit Score First
Before you do anything to correct your debt situation, you want to get your credit report and a credit score. Credit reports often contain errors, and it only takes one to ruin your credit score. Check it for errors and then follow the procedures to correct them if there are any mistakes present.
This must be done first because the interest rate you get on any new credit will be based on your credit score. A better credit score will enable you to get better terms, too, such as longer loans, able to borrow more and better interest rates.
Find Best Balance Transfer Credit Card
If you do not have a lot of credit card debt, the next step is to find a new balance transfer credit card that will take all your debt. Ideally, you want to find one that does not charge you for the privilege (this could be up to 4% on some cards), and that will also give you 0% interest for the duration.
If you do not get the ideal situation, then even paying lower interest is better than paying high interest on a credit card. Realize, though, that you only have the length of the Introductory Offer to pay down as much as you can. Once that is past, the regular interest rate on the credit card will kick in, which is usually about a year later.
If you make purchases on the new credit card – which you should not – even paying off the amount of the purchase will not help you. Any payments you make will go toward paying off the amount transferred first.
If You’re Having Difficulty with Payments, Talk to the Credit Card Companies
As with anyone else, communication is often very helpful. It is quite possible, many people are discovering, that a credit card company may actually either give you a lower interest rate, or possibly even reduce your debt – just for the asking. Call them and explain your situation, and it is possible that you could get better terms or reduced debt.
Tackle Your Credit Card Bills One at a Time
If you cannot get a new balance transfer credit card, then you may simply want to try and pay your bills off one at a time, until you get out of debt. Start with the smallest bill that you have, and pay it off as quickly as possible. This will enable you to have more money available in the fastest way to apply toward the next bill. Remember that you also want to continue to always pay at least the minimum amount due on all your bills.
Go for the Best Loan – a Home Equity Loan
If you have a lot of credit card debt, as many people do, then you may want to try a home equity loan. Before getting one of these, however, you have to own a home and have some equity built up in it. The interest rate on one of these will be considerably lower than what you would be able to get for a personal loan – secured or unsecured, or on a credit card.
Getting out of credit card debt is possible. It is not possible, however, if you continue to rack up new charges on your credit cards after you secure a credit card consolidation. You must stay away from new charges until you achieve debt elimination.