Reduce Your Credit Card Balance

April 12, 2010

Debt is one of those things that we almost always intend to use with caution, but it doesn’t always work out that way. Sometimes we just get carried away and borrow more than we can easily repay. Many keep their debt at a manageable level, but unforeseen life circumstances keep us from paying it back on schedule. Whatever the reason, being in too much debt can wreak havoc on your finances.

In a perfect world, we would all pay off our credit card balances in full each month. But it’s not a perfect world, and many of us end up over our heads in debt. Here is some advice for paying debts down and avoiding extra costs as much as possible.

  • Put every penny you can possibly spare toward paying your debts off each month. Most of us can make room to pay at least a little more than the minimum payments each month if we try. Even if it’s just a few extra dollars, it will help pay down the principal and lower the total dollar amount of interest you end up paying.
  • Work on paying debts with the highest interest off first. Once you get the highest interest debt paid in full, add the amount you were paying toward it to the one with the next highest interest each month. Keep going until everything is paid off, and you’ll save lots of money on interest.
  • Try negotiating with your creditors if you’re having trouble making minimum payments. Sometimes credit card companies will temporarily lower your interest rate and minimum payment if you can demonstrate hardship. For loans, you could try refinancing, but be careful. If your interest rate rises or the loan term is extended very much, you could end up paying a lot more in the long run.
  • If you’re hit with a late or over the limit fee on your credit card, contact the issuer right away and ask for it to be removed. As long as you have a good payment history, most are willing to knock off such fees a time or two. It’s definitely worth a try – the worst thing they can do is say no.
  • Check your credit card statement for unwanted recurring charges. Card issuers frequently persuade us to sign up for services that we’re really not interested in or can’t afford, such as credit report monitoring or various types of insurance. They sometimes offer a free trial period to sweeten the deal, and then we sign up and forget about canceling. All those little monthly charges can add up over time, and they accrue interest if we don’t pay them in full each month. So take a look at your statement, and if you see something there that you don’t want, call and have it canceled.
  • Credit cards are notorious for causing us to spend money that we really don’t have to spend. But it is possible to minimize the amount you pay in interest. And if you look over your bill carefully, you can save yourself from many of those other little charges that add up so quickly.

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