How to Handle Credit Card Debt

It's easy to get in debt over your head. Having too many credit cards can lead to overspending. 

If you limit the number of cards and set a limit on each card, you can control spending and avoid excessive debt. Carry just one or two and return all unwanted cards. Or, do away with all your high interest cards and obtain a credit card consolidation loan to lower your monthly payment and keep just one card for emergencies.

If your objective is: to reduce interest rates and lower your monthly payments, avoid bankruptcy, consolidate your bills to have one monthly payment, or simply get out of debt the fastest way possible, credit card debt consolidation can help you achieve your goal and save thousands of dollars at the same time. 

Here are 3 ways to go about lowering your credit card debt.  

1) Pay down your highest interest debts first. Avoid making more credit purchases while paying down your debt. Pay the maximum possible toward your highest interest debt, not your highest balance. This method allows you to pay down your debts at the lowest cost.

2) Low interest rate cards can be used as a tool to reduce credit card balances systematically to get out of debt. In certain situations it is wise to transfer balances from high interest cards to new credit cards with low introductory rates, this is known as card surfing. Apply for a lower interest rate card with an opportunity to transfer your balances from current high interest cards.  Start paying down your new consolidated balances, doubling the minimum payment you were paying on the old balances. It is crucial that you take advantage of the lower interest rate to pay more each month to reduce your total debt. When the lower initial rate is about to increase, you can move to another lower rate card, if one is offered to you. This is one way you can use credit card debt consolidation but it is trickier and you really have to know your interest rates.

3) Talk to your own bank.  As a way for banks to get, or keep, your business, they sometimes offer a balance transfer. This process means that the bank will take your existing credit card balance and transfer it to their credit card. Many times they will offer you a lower rate as an incentive to do so.  But remember to close out the credit card that you transferred the balance from.

The interest rate should be less than what you are currently paying on your credit cards. However, you may be able to negotiate an even lower interest rate if you do all your financial banking at the same place you are applying for a credit card consolidation loan.

As a summary, reduce your number of credit cards to one or two, change your buying habits, consolidate your debt to a lower interest rate, and pay a little more than the minimum payment each month so you can pay off that credit card faster and enjoy being debt free.  

About The Author

Paul Sauder is a successful freelance writer providing helpful tips and advice for consumers on loans, second mortgages and equity loans.  His many years of mortgage industry experience have helped others understand the business.

This article from "articles for free" is reprinted with permission.

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