How to Reduce Credit Card Debt

The average credit card debt for card holders in the United States is roughly five thousand dollars; in these hard economic times, as they attempt to make ends meet, some people may have found that debt soaring even higher.  For many, there has never been as urgent a need to reduce that credit card debt than today.  If financial matters have always been tough or unpleasant for you to deal with, it’s especially important to make sure you develop a strategy with which to work with this debt.  Here are a few tips on how one might begin to accomplish that task, reducing the stress one feels over such a burden at the same time.

If possible, you’ll want to be sure to exceed the minimum payment on the cards each month.  New laws regarding credit cards will make companies tell you how long it will take to repay a debt by using the minimum payment — and it can be shocking, taking years and even decades.  While paying the minimum payments may keep you from defaulting on the cards, it’s only advisable for the short-term; it’s won’t be a long-term solution.  Be sure to pay on time each month as well, and never assume that the due date will remain the same.  In some cases, the due dates aren’t fixed and will float.  Making a late payment will incur new fees and may increase the finance charges, creating even larger debt.  If you must pay a minimum payment, make it a priority to pay it on time.  In order to do all this, develop a system to reduce the debt by keeping track of these payments and their due dates.  Remember, too, that it’s possible to negotiate with credit card companies.  In many instances, a collection department will work with you.  You may have to tell them that you’re having financial problems and need the interest rates lowered.  Their response often will be to ask what you can do.  This may result in the lowering of the rate as well as cutting down or eliminating finance charges in the future.  Sometimes card companies will offer better deals if you switch to their account.  Talk to your own company and tell them about these deals and see if they can do better, then choose the company providing the lowest rate.

If you can’t pay at all, write to the creditors and explain the situation.  Suggest when you may start to repay them.  Usually, creditors will appreciate the candor and they’ll attempt to work with you.  At any rate, dealing directly with a problem, instead of ignoring it, will also reduce your own stress in the situation.  You know you’re doing what you can.  Try to arrange payments to your creditors in a proportion to the amount that you owe them.  If you have two hundred dollars to pay out to five creditors each month, then provide a percentage to each creditor, according to the percentage of the total debt they represent.