Tried very hard but still have debts staring in your face? And in the case of credit card debts, it’s an additional challenge not only to reduce the debts but also to do it quick in order to get away from the high interest rates charged by the card companies. In spite of your best efforts, are you not able to handle your credit card debts? It’s high time to take up some measures that will lead to credit card debt reduction. Here are a few tips to gain a hold on your credit card debts.
Hold back your plastic card
This is an absolute must. If you have some catching up to do with credit card debts, the least you can do is to avoid them from piling up. With a credit card at your disposal, there exist chances of falling for some unnecessary expenditure. The power of plastic money (spend now and pay later) and its ease of use are to blame for this. Many find it difficult to resist the temptation of using their credit cards to pick up stuff that could have been put away for another day or avoided altogether. So, hide your credit cards for a while and forget that you have one till the time your debts are taken care of. Remember that you must lose a fly to catch a trout.
Time for a stringent budget to be put in place
Believe it or not! Effective budgeting can really help you with credit card debt reduction. The focus should be on maximizing payments towards credit card debts. Get a hang of your monthly expenditures, liabilities and income generating sources. While computing expenditures, account for the necessary ones while doing away with the ones that cater more to your “wants” then “needs”. Set aside the requisite amount for your monthly consumption and assign the rest to your debts. From amongst your credit card debts, figure out the ones that are charged at a higher rate than the others. Clear these debts on a priority basis and then move on to the others. As mentioned before, be wary of using credit cards. You will do well to get a few of them cancelled.
Balance transfers to the rescue
When credit card debts run high, opting for a new credit card seems out of place. However, certain credit card companies provide you the option of transferring balance from your previous cards onto a single new card at very low charges or sometimes even free of cost (and even at a 0% introductory APR). So, once your debts are singled out to one card, credit card debt reduction and management becomes much easier. And it saves you from paying out interest on every single credit card you have.
Look out for low-cost balance transfer schemes and go for the one that suits you best. Keep in mind that there might be introductory rates offered by the new credit card issuer. Such rates change over a period of time. Your aim should be to clear your debts within the period of introductory rates. Bear in mind that credit card balance transfers do not relieve you off your debts. They are just a method by which you can shift your debts on to a single credit card. You still have to pay off the credit card debts.
Credit card debt settlement – negotiate your way to lower debts
Debt settlement is a process that involves negotiating with your creditors on your outstanding dues. In that sense, it can be counted as a credit card debt reduction procedure. The debtors, on their own or through a professional debt settlement company, might seek credit card debt settlement. In either case, there are negotiations with the creditors to lower the interest rates and the debts.
Get in touch with the credit card companies and reason out negotiations in terms of interest rates or debts. Be very clear and matter-of-factly in your approach. Explain your reasons for being unable to pay off the credit card debts in full. Most credit card companies, in order to retain clients and to keep away from losing the full amount (in case the debtor files for bankruptcy), agree on settling debts with their customers. It is imperative to get a settlement done in writing with the company. Once you are through, make sure that you keep up with timely payments. Debt settlement however, comes at a price as it has an adverse effect on your credit scores.
Credit card debt reduction is not that difficult, as it might seem initially. All it takes is meticulous planning and strict self-discipline.