Great as credit cards
can be, one of the easiest "things" that can happen
in life is the building up of a large credit card
debt. For whatever reason, making purchases with
credit cards always seems much easier than spending
cash to obtain a product or service.
Maintaining high levels
of credit card debt is not prudent. The interest
rates associated with most credit cards is high. In
fact, many people have managed to rack their card
balances up so high that only the minimum payment is
made each month. As a result, these people are
taking years if not decades to pay down their credit
card balances, all the while wasting an incredible
sum of money in interest payments alone.
In this article, a
number of strategies to reduce credit card debt are
presented. These tips are general in nature but will
provide a person with credit card debt a solid plan
for reining in credit card balances.
Target the highest
rates of interest. If you can, transfer the balance
to another credit card, where you will achieve a
zero or low interest rate for a set period. While
this balance is not costing interest you can target
other debts that are. Make sure you are prepared for
when the offer period runs out and have another
balance transfer offer ready to take over. You
should look to have your credit card application a
few weeks before your current offer period runs out.
If you cannot transfer the balance then pay off as
much as you can afford, so the balance reduces as
quickly as possible.
Credit card
companies are very competitive and as such there are
some very good 0% balance transfers and purchase
offers available. Look to take advantage of these,
but make sure you have a plan in place on how to
deal with the balance when the offer finishes.
Remember that the debt has not gone away.
As mentioned
previously in this article, credit card accounts
usually have high interest rates. The combination of
high interest rates and free spending patterns can
result in the rapid escalation of credit card debt.
A debt consolidation
loan can be an excellent tool to assist in the
reduction of credit card debt. Consolidation loans
carry interests rates far below those of credit
cards. In the long run, a great deal of money can be
conserved through the use of a personal loan.
While in many
segments of society, the word "self restraint" is
passé, out of style like last year's fashions. But,
in reality, the very best way of reducing credit
card debt is through self restraint.
Of course, it is easy
to bandy around the words self restraint and much,
much harder to practice personal control.
Although it might seem comical on the surface,
cutting up credit cards is a perfect first step to
reducing credit card debt. No cards, no charging,
less debt.
Many people leave
the payment of their credit card accounts at the
bottom of the monthly bill pile. Other primary
accounts -- rent, electricity, phone, and the like
-- understandably take a higher priority over credit
card bills. But, oftentimes a person will spend
money on incidental purchases before taking on
credit card balances. In the end, the credit card
account may not be paid on at all or, if so, after
the deadline.
One way to ensure
that credit card payments are made and one way to
ensure that credit card debt is kept under some
degree of control is via an automatic payment system
on credit card accounts. A person's bank can arrange
for the credit card account to be paid automatically
each and every month.
By ensuring that at
least a base payment is made on credit card accounts
each and every month, accelerated interest rates and
late fee penalties will be avoided.
About the Author
Neil Brown
contributes to personal finance sites such as
uk
credit cards and
personal
loans.
