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Credit Card Debt Reduction – 3 Tips To Lowering Credit Card Debt

Credit card debt can be reduced through lower rates or negotiating for reduced balances. With reduced interest, you can pay off the principal quicker with the same monthly payment. The other approach is debt settlement, which eliminates part of your debt at the cost of your credit score.

1. Transfer Balances

Credit card companies are always offering introductory deals, such as 0% on transfers. Usually such offers last for several months, giving you the chance to make sizable payments on your principal.

If you have several credit cards, choose to transfer the account with the smallest amount. Pay off that account, then take that card’s monthly payment and apply it to your next lowest balance. Soon you will be creating a snowball affect, swiftly lowering your debt. Make sure to close paid off accounts to raise your credit score and keep from adding to your debt.

2. Negotiate Lower Rates

Credit card companies are also willing to lower rates. You can try to do this on your own, but you will have more success with a debt management company. For a monthly fee, they will lower rates with credit card companies and handle your monthly payments.Debt management plans can affect your credit temporarily if your creditors report delayed or reduced payments. This might prevent you from opening new accounts for a year or more. However, with such plans you can be out of short term debt in less than five years with a much better credit score.

3. Settle For Reduction In Debt

Debt negotiation is the most drastic step to lower your credit card debt since it has long term affects on your credit. A debt negotiation company can settle some of your debt with creditors. Lenders will then report the reduced amount to the credit reporting agencies, which will keep it on your record for seven years. Debt negotiation is similar to bankruptcy and can prevent you from qualifying for conventional credit for a couple of years.

Reducing your credit card debt will have long term benefits for you. Less credit means better rates when you do want to apply for financing, especially with a home or car purchase. No matter which option you choose, research companies carefully and compare their services and fees.

 

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Effective Getting Out Of Debt Strategies

There are almost as many ways to get out of debt as there are for getting into debt. Effective getting out of debt strategies should always be designed to help reduce your overall balances and help you regain control of your finances.

Unfortunately, there are some companies that consider debt reduction to mean ‘avoiding paying off your financial responsibilities completely’. While these types of debt relief programs have their place, they also have drawbacks and disadvantages that could make your financial situation even worse in the long run. They also don’t teach you anything about managing your finances responsibly, so you’re likely to end up in the same situation again in the near future.

Serious getting out of debt strategies should focus on teaching you to take responsibility for your own financial situation. After all, if you can manage to repay your debts on your own, you will have learned a valuable skill that will help to stop you getting into the same position again in future.

Understand Your ‘Why?’

If you don’t have a strong reason for why you want to get out of debt, you risk losing motivation and falling back into your old habits. You might decide you\’re sick of making high repayments every month. You could be trying to get rid of useless debt in order to buy a home or you might simply want the freedom to not have to work so hard to keep up with debt payments. It’s important to think of a strong reason that will help to keep your motivation levels high even when things get tough. Ask yourself the real reason you want to get out of debt and then look closely at why you haven’t done it sooner.

Create a Plan

Your debt reduction strategy needs to work for your financial circumstances. There’s no point in creating a plan that says you’ll pay $500 a week off each of your balances if it’s not realistic for your income.

Begin your plan by writing down all your current debts. You should list your balances, the amount of interest you\’re being charged, your repayment amount and the creditor’s name.

Circle the debt that is charged the highest amount of interest.

Balance Transfer

If your current credit allows it, see if you’re eligible to transfer the balance of one or more credit cards to an account with lower interest charges. This won’t help you to reduce your debt – in fact, it may even increase it a little – but you should find that your repayment amounts drop.

No More Credit

If you want to reduce debt balances, then you need to stop adding more debt to them. Stop using your credit cards. Don’t charge new items or purchases to credit. Don’t apply for more credit. The object is to get out of debt, not add to it.

Be Firm

Now that you should have reduced your repayment amounts a little, be firm about continuing to pay the same amount you were paying previously on the higher interest accounts.

Most getting out of debt strategies tell you to pay extra on the minimum payment, but they don’t usually tell you how. By reducing your minimum repayment amount and then continuing to pay the same amount you were paying before, you’re making voluntary extra repayments onto your balances that will reduce them quickly.

Getting out of debt strategies sound so easy when you’re reading them, but always remember that you need to be patient and give your plan time to work. When those balances are gone and the repayments stop for good, you\’ll be glad you stuck to your plan.

Reduce Credit Card Debt And Eliminate It Before It Assumes A Horrifying Shape

“Reduce credit card debt and eliminate it before it assumes a horrifying shape” – This is really the gist of the story. So, how do you reduce credit card debt?

Well, you reduce credit card debt by preventing it from increasing and by paying off what it is currently. Simple, isn’t it?

Not really. If it was that simple to reduce credit card debt, then we wouldn’t have had so many people with credit card debt related problems. We would have been able to reduce credit card debt problems and finally eliminate them (or reduce them significantly). There are all kinds of advice available on how to reduce credit card debt, but still nothing much seems to change.

The problem still seems to persist and in fact, worsen. However, it’s not that difficult to reduce credit card debt. As we just said, there is a lot of advice available on how to reduce credit card debt and the only thing you need to do is put that advice, on how to reduce credit card debt, to practice in real life. Well, no one but you will benefit if you reduce credit card debt.

So the first step to reduce credit card debt is to prevent it from taking dangerous proportions. The 2 most important ways of implementing this step are – balance transfers and use of cash.

Balance transfer is often treated as the number one measure to reduce credit card debt. This is really something that can help reduce credit card debt by slowing down the pace at which your credit card debt is getting built. It also provides you relief in terms of the APR being 0% for initial 6-9 months (and hence helps reduce credit card debt faster). To reduce credit card debt using this mechanism, you need to transfer your balance from your current credit card(s) onto another credit card that has a lower APR than your current card. Thus you reduce credit card debt by preventing it from increasing so rapidly.

The other preventive measure to reduce credit card debt is to use cash instead of card (as such, hard earned cash is difficult to get out of pocket as compared to just a credit card). So you reduce credit card debt by not adding more to it. That is the simplest way to reduce credit card debt.

However, you can reduce credit card debt only if you stick to your resolution; otherwise it will fail miserably.