How to Reduce Your Credit Card Debt in 2014
NEW YORK ( LowCards.com) Holiday shopping has concluded, and millions of consumers bought things they probably couldn't afford. Many of us will enter January with credit card debt.
Issuers have added to the problem. Mailboxes have been filled with credit card offers as issuers aggressively market lucrative rewards and balance transfer cards, especially to consumers with good or excellent credit scores.
Consumers need to stop running up large account balances and getting themselves in a financial pinch like they were in 2008. Here are 10 tips for reducing credit card debt in 2014:
1. Know how much you owe for all credit cards debts. Write down a debt summary that includes the creditor, monthly payment, interest, balance due, credit limit and due date for each loan.
2. Contact your creditors to see if you can negotiate a lower interest rate. The less money you pay in interest, the more money you can use to pay off your credit card balance as well as other bills.
3. Pay off the card with the highest APR first. Continue to pay the minimum on your other cards until you pay off the card with the highest rate. Then focus your effort on the card with the next highest rate. After you pay off the card, keep it open, especially your oldest cards. Losing this available credit can lower your debt utilization ratio, which could, in turn, lower your credit score.
4. Pay more than your minimum payment. Your minimum payment is usually only 2% to 5% of your balance. At this rate, it will take you many years to pay off your debt. Start with the card with the highest interest rate and try to at least double your minimum payment.
5. Balance transfer offers are currently very attractive so consider transferring your balance to a card with a lower rate. If your rate is above 12%, look for a card that offers 0% for at least 12 months. To take full advantage of this 0% interest, pay as much as you can above the minimum payment each month.
6. If you have a credit card balance, stop using that card for anything other than emergencies. Use cash instead. If you carry a balance, you are paying interest for every purchase, including clothing, entertainment or dinner. Factor that in to each purchase. Paying with cash will not only save money on interest, but will also reduce the amount you spend.
7. Pay your bills on time, every time. Not only do you have to pay a late fee, but late payments can also appear on credit reports. Negative information such as this can result in lower credit scores and higher interest payments.