Steps to Cut Credit Card Debt
- Keep in mind that your creditor is probably very willing to work
with you. It's in his or her best interest to have you making some
payment versus no payment. So here are a couple of points to help you
deal with your credit card debt.
- Contact your creditor and explain your situation. Ask for a lower interest rate or a repayment plan.
- Stop using your cards. Cut them up, freeze them in a tub of water, whatever you need to do to get them out of your wallet or purse, do it!
- Pay off the cards with the highest interest rate first and work
from there. How do you do that? Call the companies and pin down exactly
what rate you are actually paying on each card. This is called
"Laddering". Alternately, you can use a "Reverse Laddering" approach,
where you pay your bill with the lowest balance first, then the next
lowest balance, and so on. This frees up more cash in hand to start
chipping down the higher balance debts you have. This method is
effective because instead of paying small chunks of money toward those
high interest bills, you can throw large chunks of money at them,
reducing the amount of time needed to pay them off. Also, your attitude
will be better because you see the results of your progress faster, and
therefore aren't discouraged as easily. You must be careful though,
because sometimes the money you pay on the higher interest is more than
the money you free up each month when paying off the small balances.
Review your finances thoroughly, crunch the numbers, and see which
method would be the most effective for your situation.
- Keep your chin up and have a good attitude. Millions of folks
just like you have begun to cut their credit card debt by following the
common sense steps outlined above. You can do it too. Good luck.