Reduce Credit Card Debt – A Step-by-Step Process

2010-07-11T04:41:00.000-07:00

Reduce Credit Card Debt – Millions of people in America today are carrying a heavy load of credit card debt, which is obviously nothing to be taken lightly. It poses so many threat’s on an individual’s net worth, credit rating, and most specially to one’s way of living. Many who are deep in credit card debt are at the point of losing all hope that they will eventually get out of it.

If you feel like you are burdened with debt to the point of ultimate frustration, take heart – there is hope. You certainly have to be worried and it might take some time, but it sure will be worth it in the end. Here is a step by step process that you have to follow to the T in order to reduce and eventually get rid of credit card debt.

1. Now is the time to stop using your card. There is no way to get rid of credit card debt if you keep on accumulating more.
2. List all of your credit cards on a sheet of paper and beside each of them, list down its current account balances, monthly minimum requirements, and interest rates.

3. After, contact each of your credit card companies and try to request for a lower interest rate. This is where your patience will be tested. It is expected that the first person you will get in touch with is a customer service representative who will have no authority whatsoever in reducing your interest rate. If this happens, simply ask to be connected to a superior in the company. It might take a couple more calls before you finally get directed to an authority who will work on your plea. At all cost, remain calm and polite at all times. Getting approved for at least one interest rate reduction would be considered an accomplishment.

4. After you have tried to negotiate the terms of your credit accounts, organize the list you have made in step 2 according to each interest rate – from highest to lowest. For accounts with the highest interest rates, transfer as many of them to the credit card accounts with the lowest interests. Major creditors provide clients with incredible introductory rates as low as 0 percent. Make certain that the introductory offer is long enough to make a difference and check if they would be charging you exuberant service charges and transfer fees that in the end it may not just be worth it.

5. Once you have completed those steps, make a new list of your credit card accounts and again organize them according to interest rates – highest to lowest. Prioritize on paying those with the highest interests. To achieve this, you need to pay more than the required minimum each month, preferably double the amount. Pay as much more as you can, putting into consideration, of course that you leave enough cash for your daily living expenses. It would not be wise to put all of your cash into paying debt, which makes you turn back to being dependent on using your credit card for daily expenditures. Also, try to pay your credit card bills as soon as they arrive in the mail. This way, you get to avoid late payment fees, which in turn would further increase your interest rates. While doing so, do not neglect paying off the accounts with lower interest rates. You can continue making the minimum payments on those.

6. Eventually, you will get to pay off the first credit card account balance in your list. When that day arrives, praise yourself and feel free to bask in the feeling of victory. However, do not celebrate your success by going out on a spending spree.

7. By the time you have paid off the first balance on your list, close the account at once. Be aware that having a number of credit cards with too much available credit to your name can be as damaging as having too much debt.

8. Whatever you have been paying on the first account you have crossed out, channel that amount in paying the second account in your list. If you have taken our advice to not use that credit card, your account balance on that card should be much lower than before. Surely it would be so much easier and faster to eliminate that debt then.

Steadily work your way towards eliminating the rest of the balances. You would be surprised how easier it would be to reduce credit card debt once the process is underway. Always stay focused on your goal. This would require dedication, commitment, and yes, you have to make some sacrifices. It is easier said than done. But then again, being debt free and getting back control of your finances is surely worth the time and effort.