Reducing credit card debt is the goal for countless Americans. There are many ways proposed to reduce credit card debt on the web and they range from impractical to illegal! Credit card debt is being helped by legislation and an increasing awareness among consumers to go lean. Learning how to reduce credit card debt should be a goal for any credit user. The tips below can help anyone learn how to reduce credit card debt with minimal effort.
With the passage of the Credit Card Accountability, Responsibility and Disclosure Act (CARD) in 2010, most consumers are watching and waiting as credit card companies scramble for new and improved ways to keep the average person in debt. Increased fees, lower credit limits on new accounts, and less available credit is just around the corner. While this act will provide some relief, it is important to lower your credit card balance as soon as possible. The best thing for a consumer to do in this economy is just say NO. That is not always a viable option. While there are numerous get-rich-schemes and pie-in-the-sky promises to be found elsewhere, below are five REAL methods to reduce credit card bills. Even just using one of them can save hundreds if not thousands of dollars over the life of your Visa, Mastercard, Discover, American Express or store credit card.
One: Shop for a new card with a better rate!!
Hit 'em where it hurts! If you are stuck with a rate above 15%, you can surely do better. Even though most Americans are sick of Big Banks and mergers, many still use them for checking, savings, and credit. In almost any community there are NUMEROUS credit unions which offer more attractive terms on nearly every type of financial transaction. Years ago, membership was more restrictive, but today it is far easier to qualify. Most have extended invitations to immediate family members and other relatives. Most universities and colleges have credit unions for current and past students. Many employers have credit union affiliations. Lists of credit unions in your area are easily found online or in your local yellow pages. Many times, you will be offered a card upon joining. I was able to ditch my 22.99% card for an 11.99% rate instantly. Most will also offer zero balance transfers from your old card. HINT: Once you shift your balance to your new card, don't necessarily cancel your old card (especially if it has no annual fee). It is important to keep a good average age on your credit report accounts. You can always cancel it in the future. In the meantime, cut it up and enjoy the interest savings on your credit union account.
Two: Don't buy more than needed to meet a minimum requirement.
The Dodd-Frank act now allows retailers to charge a minimum on credit cards. The largest minimum they can declare is $10. If a gas station or other retailer tries to say $15 or $20, then they are trying to fool the consumer. ALL credit card companies EXPRESSLY PROHIBIT a minimum charge greater than $10 to use a credit card. You are NEVER obligated to purchase a minimum amount of goods or services with a DEBIT card. If the merchant won't budge, threaten to report them to your cardholder. Normally, they will give in because they know it is in direct violation of their credit card merchant agreement.
Three: Put your tax dollars to work NOW!
So many people are delighted to "get money back" from Uncle Sam. Indeed, they are "getting back" their own money, which they have allowed the government to use for free all year. Analyze your tax situation and adjust your withholding to allow for more take home pay. This extra cash can help reduce your debt in a hurry and save on interest. I always strive for a zero refund/liability. It is your money, use it for YOU!
Four: Take a second mortgage.
Depending upon how much equity you have in your house, you can take a second mortgage or a home equity line of credit and use the money to pay off your high interest credit. This interest you pay for the mortgage will be (in most cases) tax deductible. Plus this second mortgage will surely be at a lower interest rate than your credit card. Win Win! Your high interest rate is reduced and the interest is tax deductible. This is one of the best methods on how to reduce credit card debt.
Five: Consider alternative loans!
No, not payday loans. There are numerous peer-to-peer lending sites with people more than willing to loan money to honest, hardworking people with not-so-good credit. Generally, you can submit a loan application for free and are under no obligation to accept the loan if the terms are not agreeable. You might be surprised at how much better you do on the interest rate at one of these lending sites over your high rate card.
Use as many of these methods as possible. Life is too short to constantly be stressed out about debt and the possibility of bankruptcy. Work smarter not harder! These are all proven methods on how to reduce credit card debt. Once you have mastered some of the basic ways to control your interest and debt it will be easy to move on to more advanced techniques: credit report interpretation and correction, ways to influence your credit score and others. Baby steps equal sound financial leaps. Take the first step and utilize the methods of How to Reduce Your Credit Card Debt starting today!
Best of luck to you in your debt free endeavor!