Cutting Your Credit Card Debt In This Current Economic Environment
Due to the current economic crisis, many Americans (and people around the world for that matter) find themselves with their backs against the wall.
Jobs are being lost. Home values are dropping. Everything that could have gone wrong has gone wrong.
Many people find themselves with lost or reduced wages, and have turned to credit cards to make up the difference.
The problem is that many credit card companies just aren't co-operating. They are choosing to limit the amount of new cards that are being issued, and many companies are jacking up the interest rates of even their most loyal (and credit-worthy) customers.
Average people, just like you and me, are staring in the face of mounting credit card debt and wondering what to do. In many cases, the amount of debt that is owed just continues to rocket higher every month, as many people don't have the means to keep up with the interest payments on their debt, let alone make a dent in the principal.
So what to do? How does an average person, who is dealing with a number of economic hardships right now, go about cutting their credit card debt?
Here are a number of suggestions from somebody who has done this themselves in the past.
Some are obvious; some will not be applicable to you and your current situation; some will be helpful.
1. Consider a balance transfer to temporarily eliminate excessive interest rate payments.
There are a number of credit cards that offer 0% APR on all balance transfers for up to 12 months. Here are a few:
The Discover More Card
The Discover Platinum Card
This can give you some temporary relief from high interest payments while you get back on your feet financially.
Keep in mind that interest will kick in again with these cards after 12 months, so I would try to have some sort of plan worked out by then.
2. Negotiate with your credit card company. This is especially applicable if you have recently been notified that your interest rates will be increasing.
Call up your credit card company. Talk to a representative on the phone. Tell them that you WILL NOT accept a rate increase, and that you have been a loyal customer of theirs.
In many cases, the credit card company will restore your old interest rates. I have heard of dozens of people having success just by calling up their company and getting somebody on the phone.
3. Speak to a credit counsellor. There are non-profit organizations out there that you can speak to about your debt issues.
Try the National Foundation for Credit Counseling.
4. Take a hatchet to your expenses. Break out a notepad and write down ALL of your expenses. Include everything - bank fees, eating out, movie costs, Starbucks drinks, etc.
Be creative in trying to pare down your expenses. Can you make your own coffee instead of hitting the Starbucks every morning? Can you make your own lunches? Can you watch DVDs at home instead of going to the movies?
Sure, you probably can't cut down on your mortgage or car costs. However, with a bit of creativity, most families can easily save hundreds of dollars every month with just a few small changes.
Put all of these savings towards your credit card balance, and continue to look for ways to cut costs. Paying down your credit card debt should be priority number one.
Best of luck when it comes to cutting your credit card debts. Credit card interest rates are, for the most part, absolutely egregious and off-the-charts, so please do your absolute best to trim your balances every month.
Filed under: General Knowledge