Tuesday, January 17, 2012

10 Tips to Reducing Credit Card Debt in 2012

Here are the top tips for reducing credit card debt in 2012…

1. Understand that paying off debt won’t be easy. It took time to accumulate this credit card debt, and it will probably take even more time to pay it off. Do not get discouraged or give up. Eliminating debt and building a secure financial foundation for yourself or your family is worth the sacrifice.

2. Get an honest assessment of how much you owe for all credit card debts. It may have been easier to pay the minimums without looking at the total amount that you owe, but misleading yourself only makes it worse. Write down a debt summary that includes the creditor, monthly payment, interest, balance due, credit limit, and due date for each loan.

3. Contact your creditors to negotiate lower rates. The less money you pay in interest, the more money you use to pay off your bills. Unfortunately, negotiating lower rates for credit cards is more difficult now than several years ago but it doesn’t hurt to try. If your lender doesn’t offer a lower rate, shop around for another credit card.

4. Pay off the card with the highest APR first. Continue to pay the minimum on your other cards until you

5. Pay more than your minimum payment. Your minimum payment is usually only 2 to 5 percent of your balance. At this rate, it’ll take you many years to pay off your debt. Start with the card with the highest interest rate and try to double your minimum payment.

6. Balance transfer offers are currently very attractive. So consider transferring your balance to a card with a lower rate. If your rate is above 12 percent, look for a card that offers zero percent for at least 12 months. To take full advantage of this zero-percent interest, pay as much as you can above the minimum payment each month.

7. If you have a credit card balance, stop using it for anything other than necessities. Use cash instead. If you carry a balance, you are paying interest for every purchase, including clothing, entertainment, or dinner. Factor that into each purchase. For example, if your APR is 15 percent, ask yourself if the purchase is worth paying an additional 15 percent in interest per year. Paying with cash will not only save money on interest, but it will also reduce the amount you spend.

8. Pay your bills on time, every time. Not only do you have to pay a late fee, but late payments can also appear on credit reports. Negative information like this can result in lower credit scores and higher interest payments.

9. If you are surprised by your current rates, check your credit report. It may contain an error that lowered your credit score, causing creditors to increase your rates. If you find an error on your credit report, contact the credit bureau to report it. They must respond to your claim in 30 days or remove the information that is incorrect or unverifiable. You can dispute by mail, telephone, or online. If the corrected error results in a higher credit score, alert your creditors to this and ask for a lower interest rate.

10. If you are in danger of missing a payment, or defaulting on your credit card, contact your credit card issuer as soon as possible. Your issuer may work out a payment plan with a lower rate or monthly payment if it will help keep your account out of default. If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor or someone who can. Persistence may be necessary to find the person who will help you. Explain that you are in debt, the steps you are taking to repay it, and what you can pay today. Document all conversations, including whom you spoke with, and the date, time, and the results.

Source: Money Talks (

Source: Money Talks (


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