Credit card debt is at the heart of most financial problems. The interest rates associated with credit cards is exorbitant, and it is extremely difficult to pay off credit cards.
If you can only afford to make the minimum monthly payment, it could take you years and cost you thousands of dollars in interest to pay off your debt.
It is best to avoid the credit card trap altogether, but it is too late for many families. And these hard economic times are making it even tougher for families to finance their lifestyle without the help of plastic.
Fortunately, there are ways that you can stop the credit card cycle after you have been lured in. So, what can you do to avoid further debt and reduce the debt that you already owe? The following tips will help:
The first thing that you need to do to reduce your credit card debt is to stop using your credit cards. I know, this is easier said than done. But you need to find new ways to make purchases. If you can't buy something without using your credit cards, do not buy it. Once you are out of the habit of using your cards, you will find that you forget about using them.
Do not apply or accept offers for new credit cards. Sure, companies try to lure you in with the promise of instant savings, but they fail to mention that the initial savings will be absorbed by interest payments. You will always pay more for items purchased on credit than if you paid cash for them.
Always pay more than your minimum balance. Minimum balances are calculated so that the majority of the payment goes toward interest. Only a small amount goes toward the balance owed. If you only pay the minimum, it will take forever for you to see your balances go down.
Transfer high-interest balances to low-interest cards. Interest is what makes credit card debt difficult. Always try to secure the lowest rate possible. If you have a credit card with a lower rate, you will save money by transferring balances.
Do not be afraid to ask for lower interest rates. If you have made your payments on time over a reasonable amount of time, you have proven to credit card companies that they can trust you. You should qualify for a lower rate. But they are not going to automatically give you one; you have to ask for it.
Once you get credit card debt under control, you have to be very careful not to resume credit spending. It can be very tempting to view credit cards as windfalls. While they are easy to use in the moment, they are extremely difficult to live with once the moment has passed.
If you are unable to resist, do not carry your credit cards with you. Put them in a place where access is restricted.