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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.