You might think you have your finances under control, but unexpected setbacks and stresses can quickly make a manageable load of credit unbearable. Job loss, forced relocation, unforeseen medical expenses and other financial stressors can necessitate your taking on a big load of debt in short order, throwing your careful plans into disarray.
If you’re at a point where you’re barely making the minimum payments on your outstanding balances and new charges continue to appear seemingly out of nowhere each statement period, learning how to get credit card debt reduction is the single most important action you can take with regard to your finances.
Getting out of debt is a fair bit more difficult than getting into it. Once you’ve dug yourself a debt hole and hopped in, climbing out will take some effort. Keeping a few simple tips in mind can simplify and expedite the process, getting you back on track to financial freedom faster than you ever thought possible.
First, stop using your credit cards to make new purchases. Switch to cash or debit for daily expenses and consider setting up automatic payments for your monthly bills. With monthly automatic debits that you can set up and forget about, you’ll be less likely to miss a payment and fall even further behind on your bills, incurring late fees and interest charges along the way.
Once you switch to cash and debit only, you’ll be able to devote larger amounts of your monthly income to paying down your debt. When you run large outstanding balances on your credit cards, a great deal of your minimum monthly payment is devoted to interest payments. If your total credit balance is $20,000 at an average annual interest rate of 25 percent, which is possible if you’ve missed a payment or two and found yourself subject to penalty interest, you’ll owe $5,000 in interest alone over the course of the year.
That’s $5,000 you’ll never get back. It’s more than that, actually. It’s $5,000 that you could be using to pay down your outstanding balances or purchase necessities like food, school supplies or winter clothing.
Once you’ve stopped making new credit card purchases, the next step toward getting credit card debt reduction is organizing your card balances by their rates of interest. Determine by exactly how much you can afford to exceed your minimum payment each month and devote that full amount to the highest-rate balance. Once you’ve paid it off completely, move on to the balance with the next-highest rate of interest and repeat the exercise.
This strategy pays off because it reduces your exposure to high-interest rates. If you pay off a $10,000 credit card balance with a 20 percent annual interest rate by $2,500 per year, you’ll be debt free in four years. You also will have paid $5,000 in interest over the life of your loan. In other words, you’ll have spent another 50 percent on top of your initial balance, or a total of $15,000, for the privilege of letting your balance languish for several years.
Now imagine you had devoted the full range of your financial firepower to paying off this one balance. Paying the entire $10,000 balance off in one year would cost you just $12,000, leaving an extra $3,000 and three extra worry-free years on the table. Aggressively paying down your debts requires short-term sacrifice, but it clearly pays off in the long run.
Where To Turn To Reduce Your Credit Card Debts
Once you’ve determined how best to get credit card debt reduction and begun seriously attacking your debt problems, you’ll want to contact a debt negotiation company for help with the final stages of the process. These experts can help folks struggling with credit card debt find solutions to their debt issues that don’t jeopardize their financial well-being.
Some so-called debt relief companies peddle expensive debt consolidation loans whose interest rates can vary considerably and may balloon without notice after a low-rate introductory period. These loans may allow you to pay off your existing credit card balances quickly, but you’ll be left saddled with the same amount of debt in the end.
Debt negotiation is usually a safer, more effective choice, typically taking less time to see through than debt relief loans or bankruptcy. The process is simple, involving amicable negotiations between your debt representative and your credit card issuers. Once your agent has reached a settlement with each creditor, often 50 percent or less of your original balance, they’ll bundle each balance into a single monthly payment, which you’ll hand over to them to be distributed amongst your creditors.
Discover the benefits of debt negotiation. Call today or fill out the form to learn how to get a credit card debt reduction done right!