How to reduce credit card debt? Are you stuck with a credit card debt that never goes away? If so, I am going to help you get rid of it.
Your credit card debt can be impossible to pay off if you do not have good strategies. The good news is that I am going to give you impossible to beat tips you need to use to get reduce your credit card debt.
1. Change your lifestyle
Your lifestyle plays an important role in how much money you spend. If you are in debt because you live an extravagant life, consider changing your lifestyle.
Stop buying every shiny electronic and new clothes all the time. Stop eating in fancy restaurants. Instead, start cooking. Sell the new car you recently bought that is costing you a lot of money on gas and insurance.
This is one way you will reduce your credit card debt in a very short time.
2. Transfer your balance to a lower APR card
If you have a lot of debt on a high annual percentage rate(APR) credit card, you can transfer that debt to another credit card with a low APR. This process is called the balance transfer.
The APR you pay on your outstanding balance will always make it difficult for you to reduce your credit card debt. By transferring your debt to a 0% APR, for example, you will be able to catch up on your payments.
Keep in mind that you will pay a fee on the transferred amount. Learn more about the balance transfer in the following article.
>>What Is The Balance Transfer And How Does It Work?
3. Budgeting and more budgeting
You are probably not reducing your debt because you don’t know how much you are spending. Making a budget can help you track your credit card expenses. As a result, you will be able to cut down on some of these expenses based on your priorities.
The budget will also help you understand how much you make and adjust your expenses based on your income. This technique will help you save money on some expenses. Your saved funds can be used to increase your monthly payments on your credit card debt. Thus, reducing your debt.
>>How To Save Money: Step By Step
4. A personal loan can help you reduce credit card debt
Did you know that you can pay off debt using another debt? It is like selling your debt to another lender. You can get a personal loan to consolidate your credit card debt.
Credit cards have the highest APR compared to other forms of debt. The loan will come with a much lower APR compared to what you have on your credit card.
5. Use a credit card debt advisor
Do you feel like you are stuck and don’t know how to reduce your credit card debt? Having a personal advisor can be a good strategy.
Your advisor will help you develop a strategy to pay off or reduce your credit card debt.
You may pay your advisor a one time fee or a monthly fee depending on your agreed upon terms.
6. Pay more on the most expensive card
Your highest balance will carry the highest interest charges on your credit card. This is because the charges you will pay will depend on the outstanding balance you have on your credit card and the APR on the card.
Some people get stuck with the idea that if you pay off the card with the lowest balance; you will feel great since you will have one less card to worry about.
The truth is that the highest balance will increase your debt instead of reducing it. The money you think you are paying on the lowest balance may not even compare to the monthly interest charges generated by the highest balance.
If you allocate more funds to the highest balance, you will slow down the uptrend of your credit card debt. Over time, the trend curve of your debt will start moving downward.
7. Get a 0% APR card
A zero percent APR card means that you will use your card and pay no interest on the outstanding balance. However, you must pay at least the minimum amount every month to avoid a late fee.
If you have a credit card debt with a high APR, you can stop this card and get another one with 0% APR. This trick will help you pay off your credit card debt faster while using the credit card with 0%APR.
8. Pay more than minimum requirements
Every credit card will have a minimum required amount you need to pay every month. This amount will depend on the outstanding balance on the card and its APR.
When the minimum amount is not paid, you will pay a late fee. The late fee will increase your credit card debt and affect your payment history. Thus, affecting your credit score.
Paying the minimum requirement will not be enough if you want to reduce your credit card debt.
If for example your minimum payment is $60 and your interest charges are $75; you will not be reducing your balance if you only pay the minimum amount. This because your account will increase by $15 for that month. And if you keep paying the minimum when your charges are higher than it, your outstanding balance will never go down.
For this reason, you must find a way to pay more than the minimum requirements. Not only that you will be getting rid of your debt, but also you will be reducing the future interest charges. Thus saving more money over time.
>>LEARN MORE: How To Pay Off Credit Card Debt? 10 Tips I Used
9. Reduce your credit usage
Your credit usage will determine how much debt you carry on your credit card. If you want to reduce your credit card debt, you must reduce the usage of your credit cards.
Staying under 30% on your credit usage will keep your debt under control and help protect your credit score.
>>LEARN MORE: Factors On Which Credit Score Is Based On
10. Seek help to reduce your credit card debt
You are not alone in this debt fighting battle. If it comes to where you are completely out of choices, consider asking help from your family and friends. You will never know who can help you if you do not ask.
The money you will get from people close to you could have no interest. It is possible that the money will come with fewer restrictions compared to terms from banks and moneylenders.
11. Stop using your credit cards
The fastest way to stop the increase of your credit card debt is to stop using your credit cards completely. As long as you do not cancel your credit cards, your score should not be affected.
The outstanding balance will stop increasing dramatically if you stop using your cards. Make sure that you meet at least the minimum requirements and allocate more funds toward credit cards with the highest APR or outstanding balance.
This is one of the fastest ways you can reduce credit card debt.
