Category Archives: Debt

How Do I Eliminate Credit Card Debt Without Fees?

Credit card debt can be managed easily and it only takes a couple of days to sort out the mess and start working towards an elimination of the debt. That said it does not imply that it will easy. All I can say is that it requires focus, steely determination and financial discipline. Nothing else matters.

There are a variety of ways by which you can reduce your debt and there is nothing right or wrong in any method as long as it helps you to reach your goal.

Fees – In general if you have multiple credit card balances and you are staring at a mountain of debt then it is better to have the debt consolidation companies or credit counseling companies take over. Well yes they will take their cut and charge you fees when you are already in debt. However you can do the same on your own. It will require some phone calls and some determination. This is one a area where you can easily avoid the fees.

If you have multiple cards then you can decide which one you want to have a go at first.

 Multiple cards challenge – You can have a go at the highest rate card first or the lowest card first. Some people prefer the highest one as that is the sane thing to do with the money on the highest rate paid to stem the outflow of money.

However you can argue and pay the lowest one first as typically that will help you pay a lot more money than the highest one and it helps to achieve a sense of satisfaction.

 Make a phone call – Call up all the credit card companies and ask for a lower rate. Some would oblige and some will not. Those who do not, try them again another day. You may get some heartburn but the purpose is achieved. Also in a lot of cases these reps may have the authority to lower the rate then ask for the supervisor. That helps in a number of cases as the supervisor typically will have the authority.

Transfer to lower rate card – If you have a lower rate card then it makes sense to transfer the balance to that card. Make sure that it is free as oppose to paying a fee on balance transfer.

 Budgeting – This is basic stuff. You need to have a budget and a plan. You need to stick to this plan. Now that plan has to be created and a spreadsheet is the simplest way. No need to pay fees and make sure that you do not go online and pay money for the same. There are sample spreadsheets available for the same.

 Free credit counseling service – There are free consumer credit counseling companies that will help you reduce debt. The main example of one such company is National Foundation for Credit Counseling

 Final advice – Never pay a minimum amount on the credit card debt only as it will suck you more into the debt pit. Pay more than the minimum and you have achieved a lot towards credit card elimination.

Five Tips on How to Reduce Your Credit Card Debt Without Lowering Your Credit Limit

Credit card is a dangerous plastic in your hand. In fact, this is one debt that is so easy to build given the material attractions that you can buy instantly with credit card. That said we are a nation of shoppers and credit card is an essential thing to have. No one likes to carry wads of notes or currency in the pocket like the earlier times. Also, getting a new credit card is easy given the marketing and the promotions that these credit card companies do.

Here are things that you should definitely know before we go into the specifics of credit card debt reduction

Credit card debt is an unsecured loan – Unsecured loan is the one where it is not backed by an asset. All the balances that you build on your credit card is form of unsecured loan.

Here are my tips for reducing the credit card debt 

1) Create a budget and stick to it – if you have spiraling credit card debt then first place to attack is create a monthly budget and stock to it. This is the only way you can realistically discipline yourself. It will help you see where you are spending the money. It will help your generate the money to pay some extra amount to settle the credit card debt

2) Also, if you have multiple cards then make sure that you list each of them and at least pay the minimum amount on each of them. Now it is always better to pay more than the minimum to reduce the debt fast. The card with the highest rate is the first that you should be paying first.

 3) Settling the credit card debt – If you want to settle your credit card debt then make sure that you do it yourself as opposed to going in for the debt negotiation companies as they will charge you a fee.

 4) Credit limit – The basic point to note that is that if you continue to make some payments each month you will be maintains your credit limits. Now that is a wrong assumption. Credit limit is based on the credit risk and that risk is evaluated by the company before lowering your limit.

 5) Lowering your credit limit can dent your credit score, so it is better to spend cautiously and pay proactively than to reduce the credit limit.

So if you make purchases every month which push over the credit limit then you are a credit risk and the credit limit will be lowered. The best strategy then is to not push the limits. Also, save cash and pay whenever you have the money to reduce the debt and that will automatically mean that you will not hit the limit.