This is the question on the lips of the majority of Americans who overspend and overload their credit card to the point where the debt becomes unmanageable. The average credit card debt (per American household in debt) is almost $16,000. With interest rates often above 18%, this is a huge problem as it leads to a cycle of never ending repayments. Credit card companies love it when you only pay off the minimum monthly payment. Did you know that it could take you years to pay off $500 if you only paid a 2.5% minimum monthly payment, and, depending on the interest, you could be paying back double the original debt?

The most obvious way to sort out your credit card debt is to stop adding to it and pay more than the monthly minimum! This doesn’t fall into the category of ‘secret’ but it might as well when you consider the low percentage of people who actually take this sensible course of action. As long as you make the minimum monthly payments, a credit card company will allow you to spend until you meet your ever expanding limit.

Ring The Credit Card Company!
Now here is a tip that is so simple, it’s brilliant, but an incredibly small number of people will ever follow it. We view credit card companies as this fierce, unforgiving entity (they are to be fair) so we avoid contact with them as much as possible. The simple process of ringing them and asking for a lower interest rate could yield surprising results. If you owe $3,000 and pay off $100 a month with an interest rate of 18%, you will need to pay more than $1,000 a year in interest. Contrast that with someone with the same debt and monthly payment with a 6% interest rate who pays just over $250 a year in interest.

Believe it or not, more than 50% of people who call a credit card company to get their interest rate reduced average a 33% reduction. Try and get your rate below 11% if you can. You would be surprised how amenable companies are, especially if they think you will switch your balance over to a rival’s card.

Balance Transfer
Another thing you can do to massively reduce your credit card debt is to take advantage of a balance-transfer offer. This involves transferring your debt from one card to another with a lower rate of interest. There are 0% offers out there with the majority on offer for a balance transfer fee of less than 5%. The point of a balance transfer is to be lumbered with less interest which means you can pay off existing debt much quicker.

Beware the stipulations associated with balance transfers. For example, do not place new charges on the new card as these will be subject to much higher interest payments. Failure to pay bills on time will seriously impact your credit rating and please remember that you must pay off the existing balance before the expiration date on the offer. Financial institutions will change the terms at the drop of a hat if they get the chance so don’t give them an excuse.

Credit card debt is a scourge but one that can be eliminated if you follow the above steps. Don’t pay excessive high interest rates. Negotiate with your existing bank or start looking for a balance transfer.