Credit card problems can sneak up on you and getting into debt is relatively easy. When you charge everyday items on credit cards without paying them off monthly, you might have an issue. If you want to pay down your debt, you need to encase your credit cards in a block of ice in your freezer. Once you do the obvious--stop compiling new debt--there are techniques and actions that can help you reduce your debt faster.
Pay More Than The Minimum
As the Motley Fool website explains, paying the minimum amount due on your bills each month is poor practice. Simply put, the longer you take to pay, the more your creditor makes off of you in the form of interest charges. Fool.com suggests finding extra money and paying double the minimum monthly payment. According to Bankrate.com's minimum monthly payment calculator, paying the minimum--starting at $20 in the first month--on a $1,000 credit card balance at 18-percent interest results in almost $1,400 in interest paid. It will take you 151 months to bring the balance to zero. If you pay a fixed amount of $40 each month, you will get rid of the balance in 32 months and pay just over $262 in interest.
Use the Snowball Method
A popular way to tackle a pile of credit card bills is to use the snowball method to bring down the balances. Compile a list of all of your credit card balances and monthly payments. Under the snowball method you break your own rule by paying the minimum on all of your cards except for one, but the practice leads to a sound end result. Funnel all of your extra cash into one card. Once you pay off that card, move on to the next and so on. Financial expert Dave Ramsey suggests starting with the smallest balance. By doing this, Ramsey claims you give yourself the psychological boost of quick progress, making it more likely that you will stick to your plan.
Call Your Creditors
Pick up the phone and call your creditors. The Motley Fool website indicates that you can have success renegotiating the terms of the agreements you have with your creditors. If you warn your creditors that your financial situation might lead to bankruptcy, they might be more willing to deal with you out of fear of not getting paid at all. Ask for lower interest rates and more manageable payment terms. Alternatively, you can go to credit counseling organizations that will make the calls and do the bargaining for you. Be sure to check out the agencies you are considering with the Better Business Bureau or your state's Attorney General first.
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