Credit cards can be easy to obtain for many borrowers and when credit cards are used for purchases it is easy for debt to become insurmountable for the card holder. There are a number of ways to decrease overall debt and get finances back under control.
It is Possible to Negotiate With Credit Card Companies
Credit card companies do not want to risk that a borrower is going to declare bankruptcy because if a credit card holder does this, the company will lose out on the entire credit card balance. Ask for a lower percentage rate on the credit card loan to accrue interest on the outstanding balance at a lower rate.
If the credit card company won’t adjust the high interest rate, close the account. When the account is closed, interest continues to accrue but the account will no longer be active and no new purchases can be made.
Debts With the Highest Percentage Rates Should be Paid First
Think of the total amount of debt accrued as one big loan and it will be easier to accept that the higher the interest rate of a particular credit card or debt, the quicker it should be paid off. Some borrowers pay a little each month on every loan or debt accrued and this only keeps the borrower in debt.
Pay any extra money each month on the highest percentage rate debt first and pay minimum payments only on all other debts. When the high rate debt is paid off first, the overall percentage rate of the entire amount owed decreases more rapidly.
Do Not Use High Rate Credit Cards and Close the Accounts
Debt will never go away if credit cards continue to be used. To get rid of debt one must stop creating debt. One credit card can be saved for emergencies, but it is imprtant to remember that a new outfit is not such an emergency. Only use credit if absolutely necessary if you are working on a debt reduction plan.
Use No Interest Credit Cards to Transfer Balances
Credit cards with a no interest introductory period are perfect for borrowers who are working hard on a debt reduction plan. When no interest credit cards are obtained, transfer as much possible of the highest interest credit card balances. If a high interest credit card is now paid, close the account and move on to the next highest interest credit card balance.
Putting balances onto a no interest card removes the high interest from the balance that is transferred from an existing high interest loan and allows the borrower to focus payments onto other high interest loans. A no interest credit card immediately reduces the total percentage rate of the entire debt amount and makes the overall debt more manageable.