One very effective way of reducing your overwhelming credit card debts is to transfer the existing credit card balance to a different company that offers a lower interest rate than the existing one. Credit card companies make their whole lot of money by charging the interests that you pay and it can usually go up to 25% or more. As an introductory offer, many credit card companies offer 0% interest rate for a limited period ranging from 3 months to 1 year. If you don’t let the interest to grow higher and go out of control, then you can pay off your credit card balance within a short period of time. If you cannot pay it off during the introductory period, then you can try the following tips.
- Stop over spending: it is very important to develop self-discipline within yourself. You can keep a check on your credit card debts when you become frugal and not spend unnecessarily. People who cannot stop themselves from using their cards can cut it totally or keep it in a safe place away from their reach. Use only that money that you need instead of borrowing more which can become a bigger problem. Try to use debit cards which can be a solution to many problems.
- Negotiate for a lower interest rate with your credit card company: if you are paying your credit cards at a very high interest rate, then you can call your credit card company and negotiate for a lower interest rate. If they don’t budge, then you can switch to another credit card company. It’s worth trying this shot.
- Paying more than the minimums: it is always suggested to pay more than the minimums every month. You will not only save a lot of money in interests but pay more towards the principal and reduce your debts. On the other hand, the credit card companies want you to pay only the minimums, because that’s how they make their money and do their business. Don’t let your hard earned money eaten away just in interests charged by the credit card companies.
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- Creating a budget: It is very important to create a budget so that you know how much money you need to spend for basic living expenses. Once you have taken care of all the necessary expenses, then you can allocate the remaining funds towards paying your credit card debts every month. If you are following your budget every month, then it will be easier to know how soon you can lead a debt free life.
- Seeking professional help of a credit counseling company: If you are finding it hard to manage your credit card debts, then you can talk to a credit counseling company for help. There are different debt management programs ranging from 2 years to 5 years that can help you get rid of your debts. They will go through your financial situation, set a budget, and negotiate with your creditors for lower repayment arrangements. In most cases, they will talk with your creditors and get the interests and fees waived off, thereby reducing the total amount you owe. They can also stop all the collections calls from your creditors, reduce your monthly payments, combine everything into one single monthly payment and help you in avoiding bankruptcy. This will be your first step towards a debt free life.
Helpful Articles:
http://www.consumer.ftc.gov/articles/0145-settling-credit-card-debt
