Credit Card Debt Reduction

The issue of credit card debt reduction is never easy for the person suffering the debt. It may seem like such a long and steep hill to climb that it’s hardly worth starting. There are, however, many steps you can take that will help to reduce your debt.

Taken together they can work a treat, but even putting two or three into effect can have a big impact.

Steps to take for effective credit card debt reduction:

1. Work out your finances on paper – Make a list of your debts, your expenditure and your income, and work out a budget plan. This may well involve assessing your current spending patterns and cutting right back. Credit card debt reduction cannot take place if you are continuing to add to your debts through overspending.
2. Overpay on your minimum balance – The importance of this in credit card debt reduction cannot be stressed enough. Paying more than the minimum amount on your credit card statement each month can make the difference between a debt that last months and costs tens or hundreds in interest, and one that last years and cost thousands in interest. Even an overpayment of $50 a month will have this effect.
3. High interest first – Tackle your higher interest debts first. This is an obvious credit card debt reduction tactic, but one that can be overlooked if the debtor is concentrating on removing the easiest debt first for psychological reasons. Whilst you may feel better in the short term, your debt will end up lasting longer.
4. Pay when you can – If you have an outstanding balance, then you will not be benefiting from any interest-free days, which means that your debt is accruing interest every single day. It is perfectly acceptable to pay amounts on a weekly basis via online banking, rather than wait until the statement arrives.
5. Consolidate your debts – If your credit rating credit rating will allow it, a great credit card debt reduction trick is to shift any credit card debts you have onto a single credit card with a lower rate of interest. Most credit cards offer zero or low introductory rates, or you could choose a balance transfer for the life of the debt if you envisage it may takes years rather than months to pay it off in full. This also allows for better management of your finances as you will only receive one bill with one payment demand.
6. Talk to your provider – If things are really tough, you should talk to your credit card provider. They may be able to work out a better repayment plan, or even a lower rate of interest that will save you shifting your debt to another card.
7. Stop using your credit card – Credit card debt reduction cannot happen if you are constantly adding to it with new spending. You should make sure that the plastic you use is a debit card from now on, and then sparingly.
8. Keep focused and start climbing - Don’t let the size of your debt prevent you from taking action. Thinking, what the hell, I’m in trouble already so what difference can a little more debt make, is entirely the wrong attitude. Credit card debt reduction will not even start to happen if you do not adopt the right thinking.

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