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Credit Card Debt Help – 3 Tips To Reducing Debt

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While getting out of debt may seem impossible, there are numerous solutions available that will help consumers become debt free. Individuals who have acquired an enormous amount of debt may consider bankruptcy as their only alternative. However, this maneuver to alleviate debt is extremely damaging to your credit score. Before filing bankruptcy, consider the following tips to help you reduce credit card debt.

Apply for a Low Interest Balance Transfer

Many financial experts advise consumers to pay more than the monthly minimum on credit cards. In theory, this plan will reduce your debt. On the flip side, many consumers are unable to pay double their monthly minimums. The best method for reducing debt is lowering interest rates. A low rate credit card equals low finance chargers, which means a larger portion of your payment is applied to the principal.

If you have good credit, you may be able to negotiate a lower interest rate on your current credit cards. Furthermore, applying for a low interest balance transfer will help eliminate your debt. Some credit cards offer an introductory low interest rate for a specified period. In some cases, you may pay zero interest for the first six months.

Take Advantage of Home Equity Loans and Mortgage Refinancing

If you own a home, you may be able to reduce and eliminate debt by obtaining a home equity debt consolidation loan or cash-out refinancing. With a home equity loan, your residence secures the loan. These loans are perfect for good and bad credit individuals. Because home equity loans have shorter terms and lower rates, you can reduce your debt in five to ten years.

Mortgage refinancing is another option for reducing debt. Refinancing creates a new mortgage, thus homeowners must be in a position to pay closing costs and other fees. A cash-out refinancing involves refinancing your current mortgage, and borrowing your home’s equity. The cash received at closing can be used for a variety of purposes such as debt consolidation, unpaid utility and medical bills, and other huge expenses.

Using Online Debt Management and Consolidation Services

Non-homeowners and bad credit individuals may be unable to transfer current credit card balances or obtain funds from a home equity loan or refinancing. In this case, online debt management and consolidation services can help. Debt management counselors will contact your creditors and negotiate lower interest rates. Moreover, the agency will consolidate your debts and freeze your credit accounts. This way, you avoid accumulating additional debt. On average, debt management agencies can reduce your monthly payments up to 60%, and help you become debt free within a few years.

As you leave college life behind, youre probably carrying a lot more around with you than just a shiny new diploma. If youre like most college grads, youre carrying the burden of credit card debtlots of it. In fact, the average college graduate leaves school with over $2,000 in credit card debt.

Sure, some of it might still be from the spring break trip your junior year, but most of it was probably racked up from school-related costs such as textbooks, school supplies, and food. No matter, debt is debt, and the worst kind of debt is from credit cards. You need to get rid of it as soon as you can. We know funds are tight, but by setting yourself up a payment plan, you too can quickly eliminate credit card debt.

Do more than just the minimum

With interest rates on credit card balances ranging as high as 18 to 23 percent, credit card companies would love for you just to pay the minimum amount every month. If you do this, the interest keeps compounding, and the credit card company keeps getting fatter as your debt rises. Put them on a diet; pay at least double the minimum every month on your balance. In a crunch? Who isnt? Cut out a few of lifes everyday luxuries and youll find yourself with the extra cash to put towards your balance.

Bait and Switch

Credit card companies love to send out promotional offers for cards touting low or no interest balance transfers for a set amount of time. Dont be so quick to toss them. With a little crafty maneuvering, you can make them work to your advantage. If you have one or more cards with balances incurring a high monthly interest rate, consider moving these balances over to this new low rate. It can save you a ton of money. But beware, most of these cards can hit hard after the promotional period ends, with rates that may be higher than what youre paying now. But if you think you can pay off the balance within the promotion time, make the switch.

Sacrifice your savings
Sure, it sounds horrible, but draining your savings account is a great way to get out of debt. Put it this way: the miniscule amount of interest youre getting from your savings account is nothing compared to what youre paying in credit card interest. If only you could get an 18 percent return on your money! Pay that balance off in full, and itll save you big in the long run.

Get down and grovel

If times get really tough, consider asking for help from your family. Its hard to say no to a family member, and youll probably get a pretty reasonable interest rate from them, as well. Just dont go to the well too many times; you dont want to be known as the freeloading relative. Be professional about asking for a loan, even suggesting a written agreement to show your family member how serious you are about paying them back.

Drop the B-Word on creditors

If you still cant seem to make your payments, call your credit card companies and have a financial heart-to-heart with them. Tell them that your back is against the wall financially and youre going to have to declare bankruptcy unless you can work out a plan with them. Credit card companies least favorite word is bankruptcy. If you go that route, they dont get paid. They have no choice but to work with you. Ask for a lower interest rate and a slower repayment plan. While theyll do everything they can to help, remember, you got yourself into this mess, you need to get yourself out.

Paid off? Stay that way

So youve begged and borrowed and somehow got your credit cards paid off. Now the challenge is to stay that way. First, rid yourself of surplus cards. You should only have one, two tops. Close out the rest of those accounts as soon as you get them paid off. Youll be less tempted to use them, and fewer cards are easier to keep track of. The next step: stop using credit cards all together. Leave them at home, cut them up if you have to, but dont use a credit card unless its an absolute emergency.