Uncontrolled spending can result in serious credit problems and high credit card debt. Credit cards can come to your aid during an emergency. But some people make the mistake of using credit cards to buy things that they can't afford. When unable to pay off the charges, debt accumulates and ultimately lowers their credit score.
Discuss Debt Settlement
Stop harassing phone calls and talk to your creditors about negotiating a debt settlement to quickly pay off the debt and ease the financial burden. Creditors don't have to agree to a debt settlement, wherein they forgive a percentage of your credit card balance in exchange for full repayment of a lesser amount. Negotiating a debt settlement requires cash on-hand to pay off the debt, and once creditors collect, they cease all collection attempts.
Increasing Monthly Payments
Paying only the minimum each month prolongs credit card debt, and you'll pay hundreds, maybe thousands of dollars in interest over the life of the debt. Getting rid of the debt quickly is key to saving money on interest. Understandably, you may not have the cash to pay off your debt completely. But by taking your extra or disposable income each month and applying this money to credit card debt, you can get rid of the debt faster. Maybe you have an extra $300 each month in extra income. Don't spend this money shopping or dining out, put it towards debt repayment. This extra cash could pay off a $3,000 credit card balance in approximately 10 months.
Slashing Interest Rates
Some debtors work with debt or credit counselors to get their interest rate on credit cards reduced. However, you can acquire lower rates without the help of a professional. This calls for communicating with your creditors and simply asking for a reduction. Credit counselors have ongoing relationships with creditors, so it's easier for them to negotiate better rates. But if you have a good payment history with your creditor, they may comply with your request and slash your rate. How does this benefit you? Creditors charge less interest when you have a low interest rate, so the greater portion of your monthly payment goes to lowering the principal.
Other Options for Debt
It's challenging to get rid of major debt when only paying the minimum payments, and not everyone has extra income to put towards their debt. Eliminating high credit card balances may require you look for additional employment to increase your income. This temporary arrangement can provide you with the needed cash to quickly erase your debt and start saving. Keep this mind: earning an extra $100 a week increases your monthly income by $400. Apply this extra income to a $3,000 credit card debt and become debt free in one year.
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