3 Quick Tips to Manage Credit Card Debt

Written by on December 13, 2012 in Money - No comments | Print this page

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credit-card-debtThere is no denying the fact that US consumer credit card debt has grown to unprecedented levels over the past three decades. Everything from morning coffees to yearly cruises is being purchased with credit.

The expanding use of credit cards and the role they play in the average American consumer’s spending doesn’t look to be stopping anytime soon. Sadly, with this reality comes the hard fact that, for many, revolving credit card debt levels have escalated beyond manageable levels. By taking three quick and easy actions, any credit card user can start getting their credit card debt back under control.

Cards, Cards, Cards

The average credit card user has more than one credit card within reach. In fact, the statistics put the number closer to four cards per credit card user (Frontline, pbs.org). The easiest and quickest way to start curbing credit card debt is to simply limit the number of credit cards used. Start lightening the credit card debt load by simply purging that wallet or purse of excess credit cards.

Switching all credit card purchases to a single card is a smart and easy first move. Specifically, individual retailer credit cards are usually to blame when it comes to excessive credit card debt loads. Obviously, if the amount of credit cards being used is going to be limited, the opening of any new credit card accounts should also be stopped.

Make the Call

According to the latest Federal Reserve data on consumer credit cards, the average credit card interest rate stands at over 14 percent. Many credit card holders forget or simply don’t know that they can easily lower their credit card interest rates with by simply calling their credit card provider’s customer service department and requesting an interest rate reduction.

Any credit card account that has been held for more than one year and is in good standing needs to be checked for the possibility of an interest rate reduction. Also, don’t assume that last year’s low interest rate automatically applies to any low-rate card. Many times fantastic rate offers have an expiry period and vanish. Often the lower rate period only lasts for six months. Make the call!

Double Down

One of the biggest shockers when it comes to credit card debt is the fact that a quarter of all credit card users pay only monthly minimums. Many credit cards have minimums as low as two percent of the outstanding balance. That’s a mere twenty dollars per $1,000 of debt. At that payment rate it will take a borrower over seventy-six months to repay the original debt with well over $500 of interest.

If that same borrower commits to paying a fixed thirty dollar rate per month instead, the required payment period is cut down to forty-three months with a just over $270 of interest. Take it a step further and double down on that fixed monthly payment. A fixed forty dollar payment dramatically reduces the payment period by over half to thirty months and a reduced interest impact of $189.25. Even with small fixed repayment amounts the reductions and resulting savings are dramatic.

Get Going

The numbers don’t lie. Herculean efforts to get credit card debt under control or back to manageable levels are often unnecessary. But, it does take some effort and a quick realization that timely action is necessary. Employing the three easy steps discussed here, most people will be well on their way to managing and controlling their credit card debt.

This is a guest post.  Sam Jones, the author, has been looking into techniques for how to improve a credit rating.

Image courtesy of sixninepixels / FreeDigitalPhotos.net

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