How to Reduce & Consolidate Credit Card Payments

Reducing and consolidating your credit card debt requires a level of responsibility with spending that many people find difficult to master. All too often, consumers find themselves finally paying off debt only to have some emergency arise which completely reverses all progress made with eliminating their credit debt. For this reason, it is vitally important to properly budget how much is used to pay off credit debt and still leave enough cash to take care of emergencies or other unexpected expenses as they occur.

Instructions

1

Begin your credit consolidation process by writing down how much you owe to individual credit card and loan companies. These can be divided into two categories which denote what they are. Into one category, figure your mortgage and vehicle loans, school loans and personal loans such as home improvement loans, emergency loans (pawn loans) or loans which you might have taken for a vacation. Into the other category note your credit card balances along with their interest rates and minimum monthly payments.

2

Remove all the credit cards from your wallet or purse. If necessary, destroy them by shredding them with an appropriate credit card shredder. When the balances have been cleared, you can order a new card from the issuer. But for now, remove the temptation to use them.

3

The credit card with the highest interest rate is the card you will pay off first. When creating your budget, first figure out your fixed expenses from the category that includes your mortgage and vehicle loans as well as living expenses. These should be taken out of your monthly net income first. Next, determine your needs for entertainment and other unnecessary expenses. The next to be deducted from the net income is the minimum monthly payment of the lowest interest credit cards you carried. The remainder of your budget will be allotted to your highest interest rate credit card and personal savings.

4

Pay above the minimum monthly payment on your highest interest rate card first. After you have paid that card off, determine the next highest interest rate credit card and pay that card off while maintaining the same dollar amounts spent in your budget. This will allow you to put the additional money you paid toward the credit debt you just paid off in addition to the minimum monthly payment toward the balance on that next highest interest rate card.

5

Call the customer service line of the credit card which you just paid off. Request that they reduce your overall interest rate. You must be willing to cancel that card if they do not want to lower their interest rate, but do so if you must. If they do, utilize a balance transfer to that card for any of your credit cards which have higher interest rates than the new interest rate on the paid-off card. In many cases, credit card companies will offer as much as 12 months with a reduced interest rate for balance transfers, but pay attention to the fine print to learn when the introductory balance transfer rate increases, and how much it will increase. Continue in this fashion until all the credit cards are consolidated under a lower rate or are paid off.