5 Tips to Reduce Credit Card Debt This Year
It’s time to work on reducing your credit card debt. This year, can you pay off your debt or slash it in half? These tips will put you on the path to reducing your debt and boosting your credit score in the process.
#1: Stop using credit
It is that simple. There’s no way to pay down what you owe if you are still using plastic. Take your cards out of your wallet so you are not tempted to spend on them. Instead, pay cash for each of the purchases you make.
#2: Call your lender to ask for a lower rate
If you pay your bills on time but are still paying 20% or higher in interest, ask your lender to reduce the rate. Many will do so – though they rarely will do it without you asking for it. This reduces how much you’re charged each month in interest.
#3: Aim for at least double your minimum payment
If you cannot pay off the entire credit card balance this month, pay at least double the minimum payment. This will put a small dent into what you owe and still provide you with a lower balance next month.
#4: Create a budget that gives you extra money to pay down your debt
Find room in your budget for an extra $100, $200, or more to go towards paying off your debt. It may mean giving a few things up for a while. Apply that extra to one credit card each month. It may be wise to focus on the card with the highest interest rate first since that’s the most expensive one to you.
#5: Tread carefully with consolidation
In some cases, consolidation loans can be helpful, but only if:
- They offer a lower interest rate.
- Have no early payoff penalty (and you pay the loan off quickly).
- You don’t use your credit cards again.
Finding the right method for paying off your credit card debt is important. It’s a lot of work, but when you don’t have to spend 20% or more on interest each month, you’ll appreciate the work you do now.