How To Reduce Credit Debt

One of the “easiest” things that you can do is gather a huge credit card debt. It’s easier to spend using your credit card, especially when you shop online because you don’t have time to visit stores yourself.  Here’s a good reason to start reducing your credit card debt now. If you get a bad credit rating from not paying your credit card bills, this will prevent you from getting a mortgage, a car loan, even a department store credit card.

Here’s how you can reduce your credit card debt:

  1. Pay more than the minimum monthly payment if you want to repay your credit card debt in time. You should also pay on time, or else you will be charged a finance fee along with the total. This means a bigger minimum payment for you next month, and a larger finance fee if you fail to meet the minimum again.
  2. Create a system that will help you reduce your credit card debt.  Set a deadline for yourself each month for paying your bills.  You can get a software program online that will help you keep track of your financial records and checks.  Try Microsoft’s Managing Your Money or Quicken by Intuit.
  3. Make negotiations with credit card companies.  There are many other people who have debts, which made creditors realize that if they don’t want their clients to default on their loans and credit card obligations, they’ll have to make payment terms a bit more flexible.  Negotiating can be as simple as informing the bank’s collection department that you’re having financial difficulties now (who else isn’t, anyway?) and that you need a lower interest rate to be able to pay your debt back.  They will probably ask you what amount you can manage, and you tell them based on your financial situation.
  4. If you really have a small budget for credit debt reduction, write your creditors letting them know of your situation, and let each know when you can start repaying them. They will appreciate your openness and will probably offer more lenient terms for you.  This is only a tactic for buying time, however, and is not the solution.  Still, it’s a healthy way of dealing with the situation instead of hiding.
  5. Write down how much you can pay to your creditors each month.  For instance, you have a debt of $1000 ($200 to your doctor, $400 to your dentist, and $400 for an accountant who helped you out with your taxes last year).  This means that 40% of your debt is to the dentist, 40% goes to the accountant, and 20% goes to the doctor.  If you only have $50 a month to repay your debts, this means the dentist and the accountant both get 40% of the $50 ($20), and the doctor gets $10.

Other tips:

Stay calm and cool when dealing with creditors.  Some of them think that intimidating people will get them to repay their debts, but don’t allow yourself to be bullied.  Just by reading this article, you’re already figuring out a plan to get yourself out of this situation.


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