High debt can seem like a dead-end street that gives you no way out. Even though it may seem impossible to escape, you do have the power in your hands to reduce credit card debt. Each method requires effort on your part, but doing nothing makes your situation worse. A direct approach to solving the problem gives you the best result.
1. Call your credit card company
High credit card interest rates make it hard to reduce your balance, but you can ask the company to lower your rate. As a longtime customer who has made timely payments, you may get a reduction just by asking for it.
2. Set up a budget
A simple budget plan such as the envelope system makes you limit expenditures by category. Decide ahead of time how much you need for your expenses such as food, rent, transportation, and entertainment. Then put that amount of cash in an envelope. Do not borrow from another envelope when one runs out.
3. Make lifestyle changes
An adage advises that getting out of a hole requires you to stop digging, and it applies to your debt as well. Decide to live within your means by not spending more than you make. You can break the habit of overspending by not using your credit cards.
4. Create a strategy
Understanding that high debt can affect the older generation as well as the younger ones, AARP recommends paying 15 percent of your monthly income on your credit card balance instead of the minimum amount that the companies require. Small payments allow your debt balances to continue to increase your debt.
5. Plan for an emergency
An unexpected expenditure can make you use your credit cards unless you plan for it. The extra money that you can save by living within your means, sticking to a budget and catching a break from a credit card company with rate reduction can help you start building an emergency fund.
Choosing to Work with Professional Guidance
Your decision to reduce credit card debt can improve the financial position of your family for years to come but do not expect it to happen easily. A pattern of overspending has put you in a position that creates worry, stress, no peace of mind and a sense of powerlessness. While a very worthy thing to do, it may not fit within your ability to handle on your own. Debt consolidation and debt settlement may help you resolve your credit issues when you understand how they can help you get out of debt.
Getting Relief with Debt Consolidation
A loan that wraps your debts into a single source of credit lets you pay off all creditors and focus on making one payment each month. The benefits that Forbes cites include these:
Consolidating Debts into a Single Payment
The struggle to figure out which credit card to pay each month seldom produces good results. When you ignore one, it damages your credit rating and increases the balance with interest charges. A consolidation loan lets you pay only one bill each month, but make sure that the APR does not charge too much for convenience.
Lowering the Interest Rate
Look for a loan that carries a lower interest rate than the credit companies charge. The benefit of lowering the rate of interest can help you reduce your debt significantly.
Improving Your Credit Score
Your FICO rating affects more than you may know, and a consolidation loan can help you improve it. The more you eliminate credit card debt, the more your credit rating increases.
Choosing the Debt Settlement Method
High credit card balances can call for extreme measures, and debt settlement offers a method that may resolve your financial difficulties. It may cost less than the amount you owe to get out of debt, and we can help you work through the detailed process.
Taking Time to Resolve a Credit Issue
The process requires you to suspend payments on your accounts for a period of time so that an offer to settle may encourage credit card companies to accept something instead of nothing. The built-in time frame can take months before you can make a settlement offer, but it can save you a bundle if your creditors accept it.
Most people consider bankruptcy as the last resort. It damages your credit rating for as much as 10 years, and you must give up some assets. While it may offer a faster solution than debt settlement, it can create more problems than it solves.
If you are ready to reduce your credit card rates and finally become debt free, call Christian Debt Counselors. Our trusted staff will work to find a solution that suits your individual financial needs.