Several options can help eliminate your credit card debt, but eliminating these debts quickly involves exploring different techniques and choosing the one that's right for you. The consequences of excessive debts include a reduced FICO score and reduced buying power when purchasing a home or car. Understand various tips to eliminate debt, and develop a plan to eradicate your balances.
Controlled Spending
The ability to control your spending helps you win the battle against debt. Debt on credit cards can accumulate from unnecessary spending. Identifying your needs and wants, and learning how to put your wants aside can help you eliminate debt. The less you spend on credit cards, the quicker you can pay down your balances. Start by removing credit cards from your wallet and only carry cash and debit. Do whatever is necessary to reduce spending with credit, including cutting or shredding credit cards.
Paying Balances
Do not leave charges on your credit card. Before pulling out your credit card to make a purchase, quickly assess whether you're financially able to pay off the new charge. If you're not completely confident in your ability to pay down a charge, you likely aren't able to afford the item and it's best to wait until you have the available cash. Charges or balances that remain on your credit card for several months will cost you additional money in interest.
Bigger Payments
Minimum payments reduce the interest charges and principal balance. Unfortunately, these small payments only reduce a small percentage of the principal. If you're ready to put a dent in your balances and eliminate credit card debt, start making payments that are two or three times your minimum. Pay lump sums if you have the available funds. If you have funds in savings, consider using these funds to pay off your cards and then rebuild your personal savings over time.
Interest Rate
Help your personal debt elimination efforts by asking credit card companies to reduce your interest rate. Companies aren't obligated to grant your request, but if you're a long-term customer, they may offer a permanent or temporary reduction. A lower rate combined with increasing your payments can quickly eliminate your debt.
Consolidation
When you can't get your card companies to reduce your interest rate, explore debt consolidation options. You can likely get a home equity loan or personal debt consolidation loan at a lower interest rate than your credit cards. If approved, use funds to pay off your credit cards completely, and then make monthly payments to pay off the consolidation loan. Individuals who don't qualify for bank financing can possibly manage their credit card balances and consolidate with a credit or debt counseling company. These companies merge debts into one monthly bill.
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