May 6, 2009
Getting rid of your credit card debts is by no means an easy task. This type of debt is forever growing, and similar to many problems, many people ignore it until it gets out of control. If you owe debt on credit cards then the best thing to do is to take action now before it is too late. There is a strategy that you can use to reduce debt which allows you to be completely fee of debt on your credit cards. This particular method has been recommended by some experts.
The steps of the strategy are as follows:
- Get all of your credit cards together and list the details of them. State the balance, interest rate, minimum payment percentage and other details that are relevant.
- On the list of your credit cards rearrange it so that the card with the highest interest rate is at the top and descends accordingly from highest to lowest.
- Calculate the required minimum payments for all of the cards.
- Work out how much extra money you can come up with each month to apply to your credit card debt. If there are no ways you can pay additional amounts above the minimum payment then you should work out a budget and cut any expenses.
- Every month you should pay the minimum amount on each credit card except for the one with the highest interest rate. The one with the highest interest rate you should pay the minimum balance plus the additional amount that you can afford. This will allow you to reduce what you owe each month.
- You should do this until the card with the highest interest rate has been paid off entirely. Now take the amount you were paying off on that credit card each month and then use it with the minimum payment on the second card until this has also been paid off, continuing to pay the minimum amounts on your others cards as well.
- Keep repeating the process until all of your credit cards have been paid off.
There are some experts that recommend paying off the cards with the lowest interest rates first because they are easier to manage. In my opinion this is a mistake because the higher interest rate cards accumulate even more costs more quickly. This is why priority should always be given to the highest down to the lowest. By the way, do not be afraid to call your credit card companies and ask for a lower interest rate. You may be surprised at their reactions. If the company refuses to lower the interest rate then do some homework and find a new card with a lower rate of interest and transfer the balance. Lower interest rates mean that the debt is far more manageable for you and will be less stressful. If you would like more information on strategies about debt reduction then please consult an expert in your country of residence.