5 Proven Ways to Reduce Your Credit Card Debt
If there’s something that’s bothering Americans, it’s their own credit card debt that haunts them in their sleep.
CNBC states that Americans have a net debt outstanding of $1.08 trillion on credit cards. In 2024, it is one of the major financial issues faced by the US.
A recent Experian report also states that Americans have an average repayment balance of more than $6300.
You think that’s amazing? Think again. If you’re one of the millions who have an outstanding debt record, you better start paying your debts as soon as possible. You may want to pay more than the minimum every month to quickly solve your loan as fast as possible. As long as you prolong your credit card debt, the interest piles up, thus costing you’re more than what you plan to pay for. That’s why we recommend paying more than the minimum to be able to solve your debts easily.
Have you made up your mind in finally tackling your debts? I will discuss some essential debt management strategies. These 5 proven ways reduce credit card debt. I have discussed each method in detail here.
1. Diligently Pay Above the Minimum Require
As tempting as it may sound, you should always try to pay more than the minimum due amount. On every statement delivered to you includes this information: the minimum amount required for your transaction, your outstanding balance, and interest rate info. You should consider sitting down and computing how much you should pay above the minimum to be able to finish your debt quickly. You should also consider your financial situation and expenses. Don’t pay a large sum if you cannot afford it. Remember that you still have other expenses!
2. Live on a Frugal Budget
Now that you’re starting to pay your debt, it’s time to change the way how you spend your money to limit yourself to spending more than what you can. Living frugally with a bare-bones budget is a great way to set yourself some limits and how you can get yourself in control of your expenditures.
This budgeting technique works simply: you’ll have to allocate money for all your essential expenses and nothing else. A simple budgeting technique such as this can help you save up more money to pay your debt or if you are anticipating a loss that has a direct impact on your expenses. People with queries like “discover is suing me” have also settled their budget with some innovative debt-paying methods.
However, even if you’ve finished paying for your debt, we still recommend continuing living frugally — so you won’t fall again into debt.
3. Ask for Lower Interest Rates on Your Credit Cards
It is the best approach out of the 5 Proven Ways to Reduce Your Credit Card Debt.
Even if you just want to cut your credit card into two to stop this debt madness, we recommend sticking to your current card through and through.
If you get a new card, you risk the chance of maintaining your current credit score standing. Every time you open a new account, it puts a dent in your credit score, resulting in higher interest rates that will only add more fuel to your burning debt.
4. Tactical Approaches During Payback
You have fallen short of the repayment balance. You don’t have adequate SB balance. It’s not your case specifically. It is the story of Americans on an average.
So, what will you do, when you face fund crunch while repaying for your cc?
Here’s a list of composite strategies that might help you.
- Converting payment into EMIs
WPR found that 8.9% cc bills became delinquent in 2024. Why? Because Americans do not care about their cc bills, such issues happen. Therefore, I suggest checking your credit card bills in real time.
If you feel you cannot pay back the whole monthly, break down your bill into EMIs. In the US, big banks like Chase also give this leverage to customers.
Additional TIP: look out for the extra processig chare you need to pay, for converting uour outstanding amount into EMIs.
- Finding an innovative payment strategy
Most Americans do not have a proper repayment strategy. That’s why they cannot fish out of the debt trap, when the repayment amount piles up.
Here, I will recommend you to pay more than the minimum balance due. But, what will happen if you pay the minimum balance due only?
I made a list of 5 Proven Ways to Reduce Your Credit Card Debt , to discuss such issues mainly.
In this case you must know that banks charge interest daily. At the same time, you pay to pay a penalty or convenience fees for not paying the full due.
So, the TIP is to pay more than the minimum balance due.
In the US, at least 13% have 5 credit cards. So, it becomes difficult to manage the debt at a point of time.
So, what should you do?
Sort the high interest debts at first. According to me, this is the best out of the 5 Proven Ways to Reduce Your Credit Card Debt.
For example, if you have First PREMIER® Bank Mastercard Credit Card, pay it off immediately.
This card charges 36% interest rate which compound when you delay repayment.
- Paying the smallest dues first
Don’t chicken out because of the big debts. Rather, clear the small dues first. When a credit card issuer reports to the credit bureau, the amount due does not matter.
At the same time, you can get clear of the small loans at once. So why delay those and accumulate higher interest?
If you continue doing so, some day your interest will tame your principal amount.
5. Use a Personal Loan to Consolidate Your Balances
Personal loans could help you consolidate your debts into one more manageable loan. If you just do it right, it can save you money and eventually improve your credit score. However, remember that taking out a personal loan will not pay your credit card debt. It will just refinance your debt for a loan with better and easier terms.
Getting a personal loan from www.firstchoicefinance.co.nz will also convert your credit card debt into a fixed-term loan. Most personal loans have terms ranging from 1 to 5 years. Credit cards are open-ended sources of credit. As long as you pay the minimum amount, there is no fixed deadline to pay your credit card balance.
Depending on how much you currently pay toward your credit card debt, getting a personal loan could extend the term of your credit card debt. Although doing this would probably lower your monthly payments, it may also increase the overall cost of your debt. Unless reducing your monthly payments is your chief concern and you can’t afford any other solution, it’s best to opt for the shortest possible term.
6. Contact the Professionals
Did you know that there are lot of companies for managing your vicious debt?
Yes. You heard right. Companies like American Consumer Credit Counselling or Money Management Internatinal are best rated credit debt management companies.
You can contact these agencies. They charge nominal fees and offer flexible payment options.
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