Credit Card Debt Consolidation Tips | Help with Credit Card Debt
If you are American, you probably have credit card debt, it is unfortunate but most Americans live outside our means, or are subject to unexpected circumstances that require us to take on additional debt. If you are debt ridden, and have pledged to start paying off your credit card debt, the debt consolidation tips below will help you get the ball rolling in the right direction.
Stop Using Your Credit Cards
The first and most important thing to do if you plan to pay your debt off is to stop using those credit cards. It is impossible to pay your balances down if you do not start living within your means. Create a budget that you can live with and commit to, then cut all but one emergency card up. Give up the luxuries, you do not need something from every convenience store in your city and you do not need to eat out several times a week, spend wiser, your financial independence depends on it.
Transfer balances to a Low or 0% interest credit card
If you have credit card debt and you are paying interest on carried balances, you are throwing money away every month. If you have good credit and get the opportunity, consolidate your balances to one credit card, or as few as possible. This will help reduce the amount of money you toss away every month by paying interest fees and it will free up additional cash that you can use to begin paying down your balances.
A great way to start consolidating your credit card debt is to look and see if you have available credit on any lower interest rate cards. If you do have available credit, call your company and ask them to transfer the balances; do not forget to ask if they have any balance transfer offers. When calling your company, start with your oldest credit card, you might end up discovering that you already qualify for a higher limit. In addition, banks and financial institutions appreciate your business and if you have been a good borrower, you could get a credit increase and a lower interest rate.
You may also be able transfer balances from one card to another by using promotional checks that you received from your credit card company in the mail. If you do use a check, make sure it is a balance transfer check, and not a cash withdrawal check tied to a high interest rate.
If you lack available credit on any of your current cards, it might not be a bad idea to open a couple new accounts that offer low interest rates on balance transfers. You have already stopped using your cards, so open new cards if they will help get you into lower interest rates. It is common for people to constantly transfer and consolidate debt to cards with lower interest rates.
Pay More than Your Minimum Payment Each Month
If you are trying to pay off your credit cards, you will need to create a plan that makes the most out of your monthly payments. Everyone has a unique set of circumstances, so there is not a plan that fits everybody. A few things however, work best for most people.
If you are paying interest on credit card debt, the card with the highest balance is usually the card that is costing you the most in interest each month. Pay the minimum on your lower balance cards and attack the principle on the card with the highest balance.
When the balance on that card gets lower, re-evaluate your cards to make sure you are still paying off the most expensive credit card. When doing this, consider the interest rates on the cards. If you were previously paying off a card with a 4.99% interest rate, it might be a good idea to start paying off that card with a 12% interest rate. The only way to know is by looking at your monthly statement to see which card charges you the most in interest fees each month, look at the amount and not the interest rate.
Evaluations may occur as often as each month, but if you continue to put extra money towards the most expensive card, you will save more money each month. After you get a few cards paid down, check to see if there is an opportunity to consolidate debt from high interest rate cards to cards with lower interest rates. Do not forget to call your card companies and ask for a better interest rate after you pay down balances, you might be able to get a great deal.
Consolidating your credit card debt and paying your balances off is not always an easy task, but a debt free life provides more opportunity for you to save for your future. Buckle down and stick with your commitment, a debt free life is a great feeling.
See Also:
Knee Deep In Debt – Federal Trade Commission
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