Credit Card Debt Consolidation: Top Ten Tips
It’s no secret that credit card debt has become a major
problem facing our economy today. If you’re one of
the millions of consumers suffering from major credit card debt, then
you’re probably desperate to get your massive bills under
control. But the options seem limited; you probably think
that it’s almost impossible to make your paycheck stretch
enough to get a handle on all of your debt. It can be easy to
let credit card debt take over your life – don’t
let it! Whether you had an accident and had to live off of
your credit cards for a few months, or just weren’t smart
with your debt, there are ways that you can control your debt and pay
it down – without asking your boss for a 50% pay
raise! Here are the best tips for credit card debt
consolidation:
1: Put down the credit
card: It may seem like common sense, but if
you’re still charging purchases, you will never escape your
credit card debt. Hide your credit cards and use your debit
card to make your everyday purchases – you’ll soon
spend well within your budget!
2: Cut down on luxuries:
Do you eat out for lunch everyday? Do you absolutely have to
have that four dollar latte every morning? Luxuries like
these are exactly that – luxuries. When
you’re trying to get rid of credit card debt, you have to
give up a few unnecessary luxuries. Try bringing your own
coffee to work, or make lunch at home. The peace of mind
you’ll have once your debt is gone will definitely be worth
it.
3: Look into a balance
transfer: If you’ve been carrying a
hefty balance on your credit cards, you may as well be flushing
fistfuls of cash down the toilet. When you carry over a
balance on your card month after month, your interest rate skyrockets,
which puts even more pressure on your wallet. Consider a
balance transfer to a low interest rate credit card, which will help
save you hundreds of dollars in interest; not to mention make it much
easier to pay down your credit card debt.
A balance transfer is a viable option for many individuals, but a
warning about low interest rate cards: make sure that you’re
not buying into an introductory offer. The worst thing that
can happen is watching your credit card bill skyrocket once the
incentive period is over!
4: Try debt consolidation
loans: Many banks will offer you private debt
consolidation loans to help you pay off that credit card
debt. But make sure you’re not charging anything to
your cards while paying off the consolidation loans, as
you’ll just be digging a deeper financial hole.
5: Make extra
payments: Many people pay only the minimum
payments on their credit
cards, but this prolongs the life of your debt –
not to mention the hundreds of dollars that you’re throwing
away on interest alone. Pay more than the minimum payment, or
if you can, make small extra payments throughout the month.
You’ll see your debt shrink in no time.
Here’s another tip for making extra payments: use the money
you previously spent on unnecessary luxuries towards your credit card
debt. For example, if you spent four dollars a day on your
large coffee for a month, that’s $120…for some
people, that’s like another credit card payment! If
you budget your monthly expenses based on what you need – not
what you want – you’ll find the money to make those
extra payments.
6: Dip into your savings
account: This suggestion may seem a
little shocking, but if you’re drowning in credit card debt,
it’s worth dipping into your savings to alleviate the
debt. However, if you can, try to avoid cashing out your
401(k) or any other retirement savings you may have.
7: Borrow against your
life insurance policy: If your life insurance
has cash value, borrow against the policy. Again, this
suggestion may seem a bit shocking, but you need to get rid of that
credit card debt! However, make sure you pay back the loan,
as any leftover debt will paid off by using part of your
policy. This may seem insignificant now, but your grieving
family will thank you for it.
8: Get a home equity
loan: If you’re a homeowner, and have
accumulated equity over the years, consider a home equity loan (HEL) in
the amount needed to pay off your credit card debt. Home
equity loans often have lower interest rates than those of credit
cards, so you’ll be trading off your debt at 20% interest
rate for one at 8%. This method alone will help you find some
extra cash to pay off debt.
But before you take out a home equity loan, make sure you’ve
learned your lesson regarding credit card debt.
Don’t take out a loan, and then continue to use your credit
card to make purchases – you’ll only further bury
yourself with debt.
9: Talk to the credit
card companies: After all, they’re
human too! If it seems like you’ve tried everything
to get your debt under control, with no success, try taking your case
to the credit card companies. Let your creditors know your
situation. Maybe you still haven’t recovered from that
accident, or you had a huge unexpected purchase to make; regardless,
make sure to mention the word bankruptcy during your
conversation. The last thing credit card companies want to
lose is their money, so they’ll often renegotiate your
interest rates and debt balance in order to protect their assets.
10: Go to credit
counseling: Credit counselors are often a great
resource for consumers looking to reduce their credit card debt, as
they can help cut down your debt balance by more than half.
This is often the last step taken by individuals before declaring
bankruptcy, and one of the most successful.
Although you may feel like you’re drowning in debt,
don’t worry – there are ways out that
don’t involve getting a better-paying job or declaring
bankruptcy. Just follow these tips, and you’ll be
debt-free in no time; but beware! Make sure you’ve learned
your lesson, or else you’ll repeat the debt cycle again and
again.
Article by Richard Greenwood - co-founder of the Click 4 Group that
helps to compare credit card offers including low
interest credit cards which can be useful in paying down your
debts.
For additional information on credit cards or related topics please visit our library of credit card articles.
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