If you are feeling overwhelmed and stressed out because of your credit card debt, then you need to put these six steps to work in your life now. There's no greater feeling than taking control of your financial situation and turning it around.
Step One - Decide Which Card To Payoff Next
Before you begin, you need to write down all your credit card balances and their monthly interest rates. Put your credit cards in order from highest to lowest by their interest rates - not by their balances. Pay off the higher interest rate cards first because they are charging more per month just for you to have a balance!
Note: If you have some small balance credit cards which can be eliminated in one or two months of payoff, then go ahead and eliminate them first. Then proceed to follow step one.
Step Two - Reduce Interest Rates Whenever Possible
Sometimes you can get your credit card interest rate reduced just by making a phone call to the credit company. You need to negotiate with them, and it may not work every time, but it is certainly worth the effort!
For example, if you have $5000 of credit card debt at 18% interest, then your total interest payments are $1358. But if you can negotiate the interest rate down to 12%, then your total interest payment is only $810. You've saved $548 just from making a phone call! That's not bad at all!
Note: if you've been late with payments or have a bad credit rating, then you may not be successful with this tactic - but it is definitely worth a try!
Step Three - Get Rid Of Your Credit Cards
If you have a bad habit of getting in over your head with your cards, then you really just need to cut them up for now. If you can't do it, have a friend or family member do it for you. It is a good idea to have at least one card just for emergencies. Keep the card with the lowest interest rate - but give it to someone trustworthy to keep for you (such as the friend or family member that cut up your cards for you).
Medics out in the field will tell you that the first thing you have to do to save someone's life is to stop the bleeding. In the case of credit card debt, you stop the bleeding by taking away the credit cards. You can't keep spending on them if you don't have a credit card!
Bonus Step: Credit Counseling
This is a drastic step, but it can save your credit as a last resort. Make sure to check out the credit counseling company before you put your money and trust into them. There are some real scams out there - don't fall for them.
Credit counseling corporations are usually considered 'non-profit' but that doesn't mean they're losing money! How they operate is that they take over ownership of your credit debt and they collect money from you each month. They negotiate a much lower interest rate from your creditors and they make payments based on that lower interest rate. Basically they make their money off of you sending them regular monthly payments (at a higher interest rate than what they are paying to your creditors).
You can avoid involving a credit counselor by simply making a phone call to your credit card company and negotiating a lower interest rate on your own! This way you avoid paying the middle man (i.e., the credit counseling company).
It's better for you to avoid using a credit counselor, but it is certainly something to consider if you need to take drastic action. It's better than filing for bankruptcy!
Summary
Follow the first two steps in this article at the very least. If you have to take more drastic measures, then add step three. Finally, if all else fails add step four (credit counseling).
Good luck to you on your journey to financial success!
Step One - Decide Which Card To Payoff Next
Before you begin, you need to write down all your credit card balances and their monthly interest rates. Put your credit cards in order from highest to lowest by their interest rates - not by their balances. Pay off the higher interest rate cards first because they are charging more per month just for you to have a balance!
Note: If you have some small balance credit cards which can be eliminated in one or two months of payoff, then go ahead and eliminate them first. Then proceed to follow step one.
Step Two - Reduce Interest Rates Whenever Possible
Sometimes you can get your credit card interest rate reduced just by making a phone call to the credit company. You need to negotiate with them, and it may not work every time, but it is certainly worth the effort!
For example, if you have $5000 of credit card debt at 18% interest, then your total interest payments are $1358. But if you can negotiate the interest rate down to 12%, then your total interest payment is only $810. You've saved $548 just from making a phone call! That's not bad at all!
Note: if you've been late with payments or have a bad credit rating, then you may not be successful with this tactic - but it is definitely worth a try!
Step Three - Get Rid Of Your Credit Cards
If you have a bad habit of getting in over your head with your cards, then you really just need to cut them up for now. If you can't do it, have a friend or family member do it for you. It is a good idea to have at least one card just for emergencies. Keep the card with the lowest interest rate - but give it to someone trustworthy to keep for you (such as the friend or family member that cut up your cards for you).
Medics out in the field will tell you that the first thing you have to do to save someone's life is to stop the bleeding. In the case of credit card debt, you stop the bleeding by taking away the credit cards. You can't keep spending on them if you don't have a credit card!
Bonus Step: Credit Counseling
This is a drastic step, but it can save your credit as a last resort. Make sure to check out the credit counseling company before you put your money and trust into them. There are some real scams out there - don't fall for them.
Credit counseling corporations are usually considered 'non-profit' but that doesn't mean they're losing money! How they operate is that they take over ownership of your credit debt and they collect money from you each month. They negotiate a much lower interest rate from your creditors and they make payments based on that lower interest rate. Basically they make their money off of you sending them regular monthly payments (at a higher interest rate than what they are paying to your creditors).
You can avoid involving a credit counselor by simply making a phone call to your credit card company and negotiating a lower interest rate on your own! This way you avoid paying the middle man (i.e., the credit counseling company).
It's better for you to avoid using a credit counselor, but it is certainly something to consider if you need to take drastic action. It's better than filing for bankruptcy!
Summary
Follow the first two steps in this article at the very least. If you have to take more drastic measures, then add step three. Finally, if all else fails add step four (credit counseling).
Good luck to you on your journey to financial success!