Debt Consolidation Blog

Posts Tagged ‘credit card debt’

Having thousands of dollars in credit card debt can be mentally stressful as well as being detrimental to your overall financial health. Carrying a high balance on your credit card will lower your score over time since FICO considers a high credit balance as a negative component of your credit report.  Paying off excessive credit card debt does not have to be lengthy and drawn out process. It is possible to pay off debt quickly with some dedication and restructuring of spending habits. Knowing how to quickly pay off your debt can better assist you in regaining control of your finances.

The first way to eliminate credit card debt is to avoid paying only the minimum each month. Although many consumers are aware of this fact, it is still tempting to just slide by and pay the smallest amount each time. However, this will do nothing towards making a dent in a large credit card balance and can often times result in the consumer paying more over time. If eliminating a high credit card balance is a priority then it is essential to make the decision to pay more than the minimum required amount monthly.

In addition to paying more than the minimum, it is helpful to plan how much extra money you can put towards your credit card bills each month. If you can make double and triple payments on your credit card bill, it is possible to quickly eliminate balances that might otherwise take decades to pay off. The first step in determining how many extra funds are available to put towards credit card debt is to write out a budget and pinpoint potential money leaks. Small items such as a daily newspaper and coffee may be diverting funds you could be using to pay off credit card bills. Taking the time to look at your complete financial picture and discover hidden money can give you the much needed additional funds to help you meet your debt repayment goals.

Besides eliminating small purchases, it can also be helpful to consider consolidating your payments into one. Take the time to carefully research debt consolidation firms to find one that may be a good fit for you. You can also consider obtaining a debt consolidation loan through your local bank. The interest rate on the loan will most likely be much smaller than the sum total of individual credit card accounts. This singular payment will be much more manageable and will be easier to pay off over time.

Paying off debt quickly may seem challenging but with some dedication and focus, it can be a real possibility. Make sure to take all your purchases and money leaks into account to find hidden sources of money that can be used to pay down credit card debt. In addition, investigating options such as debt consolidation are proactive methods for eliminating debt quickly. Making the effort to reduce your debt using these strategies can help build a sound and secure financial future.

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Paying off credit card debt is not always an easy feat. It can be difficult to come up with the funds just to make the minimum payment each month much less trying to pay off the balance. Depending on how much credit card debt you have, it is sometimes necessary to use innovative methods to help with paying off credit card debt. With these four smart tips, you can reduce your credit card debt and regain control of your finances.

The first tip for reducing credit card debt is to plan a realistic monthly budget. When planning your budget, review your bank statements to give you an exact idea of what you are spending money on each month. This can be especially helpful if you use your debit card for the majority of your purchases. Once you have a concept of where the majority of your spending is going, it can be easier to rework your financial plan to find additional funds to put towards credit card debt repayment. A budget is an excellent place to start as it gives you a complete financial picture to work with.

The second tip for reducing credit card debt involves utilizing alternate sources of funding. If you have a whole term life insurance account, you can withdraw money that may not have to be repaid. With these additional funds, you can pay off small balances and depending on the amount of your debt, you may be able to eliminate your debt altogether. Utilizing this method can greatly reduce the pressures of ongoing monthly payments from multiple credit card accounts. The loan you receive from your life insurance policy usually has an interest rate much lower than that of commercial rates.

Although not a quick fix, taking on a part time job can provide much needed funds for reducing credit card debt. Many people shy away from this option and claim that they don’t have enough time, however just adding in a weekend job at eight hours each day for eight or nine dollars an hour can provide up to six hundred additional dollars per month. The best part about taking on a part time job is that it can relate to a hobby or interest that you find enjoyable. This additional job can be at a gym or fitness center which may offer employee discounts which will work to lower your total monthly gym bills. Using this creatively can help eliminate credit card bills very quickly and open you up to new experiences. Once the need for the part time job has passed, you may find that you enjoy the additional income and social interaction.

The last tip for reducing credit card debt is to set up a specific strategy. Many people find that paying down the cards with the lowest balances first makes the process of reducing debt seem more feasible.  Another option is to pay off the credit cards that have the highest interest rates and will end up costing more in the long run. Whichever route you take, the important thing is to find a strategy that works and to stick to it.

Paying off credit card debt can be possible by utilizing at least one of these four smart tips. The important thing is to commit to a course of action that works well with your lifestyle and financial goals. Ultimately credit card debt like all other obstacles are manageable with a little planning and dedication.

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Too much credit card debt can be a hassle to pay down, especially in these tough economic times. Pay down your debt using these financial management tips.

Stop accumulating more debt.

The first step is to recognize that you do have a big problem and that it won’t go away if you keep using your credit cards to rack up more debt. It will take a lot of discipline to stop using plastic all the time but if you can do it, just this one step can really help you pay down your debt. So long as you continue paying more than the minimum amount and stop accumulating more debt then you are on the right track and eventually your balance will go down to zero.

Pay on time.

As much as possible, pay on or before the due date to avoid late fees. These fees can add up to a significant amount if you are regularly late on your payments. If the problem is the date itself, you can ask your credit card company to change the date to a more convenient one for you.  This can often help with cash flow and financial management problems.

Save up for big ticket items.

There are probably a lot of things you would like to buy but it’s not a good idea to use your credit card too much. Don’t buy big ticket items if you can’t really afford it. Start a savings fund for any big purchases you want to make and put money on it every month. That way you won’t have to go into debt to buy expensive items.

Get a better credit card.

Shop around and apply for a card with a lower interest rate if you think you can get one. Alternatively, if you want to stay with your current credit card company but want a lower interest rate then you can call your credit card company and ask for a lower rate. Lenders will often lower their rates for long time customers.

Consolidate your debts.

Debt consolidation can help you pay less in the long run by using your mortgage or a separate consolidation loan to pay off your high interest credit card debt. Consolidation loans have a lower interest rate so it may be a good choice for you. Talk to a debt consolidation expert to find out if you qualify for this type of loan.

Make additional payments.

If you do decide to consolidate, you will normally find that your monthly payments will be reduced. This means that you will have some extra funds you can use to pay down your debt as soon as possible.

Keep making payments and stop using your plastic.  It’s not as easy as it sounds but this is a solid and simple strategy that will allow you to pay down your debt and give you peace of mind about your personal finances.

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It might surprise you to know that there are in fact several ways to reduce your credit card debt while paying less money overall. There are two primary ways: getting lower interest rates and reducing fees.

How can you get lower interest rates? It might take a bit of time and effort but these tips can help you reduce your monthly credit card bills.

Shop around and look for a card with lower interest rate. You can transfer your current balance to that card.

You should also try calling up your current credit card company and asking for a lower rate. A simple phone call could save you hundreds of dollars!

What should you do when you call? Keep your strategy simple. Tell the customer service representative that you:

have been a good customer

• want a lower interest rate
• have received an offer for a credit card with a lower interest rate
• are thinking of closing your account and switching to another company

Then ask the service rep “what can you do to help me?” If the company really wants to keep your business then the customer service rep will probably agree to lower your interest rate.

Not everyone will qualify for the lowest interest rates. This is mainly reserved for people who have excellent credit scores. If you regularly receive credit card offers in the mail you probably have a good credit score.

As for the second method of paying less, you should try to reduce your additional credit card fees. Late fees can add a significant amount of money to your balance. Try to pay on time as much as possible so that you won’t be charged more.

These tips are all do-it-yourself stuff but you may need outside help if you are not able to handle matters on your own. If you cannot pay your monthly bills on time, consider using a credit counseling service. The credit counseling company can renegotiate debt payments with your creditors to reduce the total amount you owe. They may also be able to get your interest rates lowered and your late fees waived.

Credit counseling organizations can help you manage your money and develop a household budget. Their counselors are trained and certified to provide professional advice about debt management. They can also help you develop a personalized financial plan. This is a great option for people are unable to manage their credit card debt on their own and need expert help.

Articles on this site have been acquired from a variety of sources.  No content on this site should be considered financial or legal advice

Buying your own home and getting a mortgage to pay for it is an intricate process that requires a lot of planning. What should you do with your credit card debt before getting a mortgage?

First of all, there’s nothing wrong with having a balance on your credit cards. You don’t need to pay it down to zero before you get a mortgage. However, you do have to make sure that your debt is not so high that you will have difficult paying all of your debts on time every month – including the mortgage that you intend to get. That’s a pretty basic tip but here are a few more that can help you the most out of your home loan.

Your credit score is one of the things that will decide whether you get a good interest rate on your home loan or not. People with the best credit scores get the best interest rates and credit card debt does play a large role in determining your credit score.

1. Prompt and on time payments of your credit cards is very important. If you have at least one year of no late payments then you should be in good shape. Lenders like to see that you pay your bills on time so you are more likely to get your home loan approved with a good history of credit card payments.

2. Reduce your credit card debt as much as you possibly can. Pay more than the minimum amount every month so that you can whittle away at your credit card balance. If you are able to lower it to just 20% or less of your credit limit then it will reflect favorably on your credit score.

3. In line with the third tip given above, do not close old credit card accounts. Why? Having more credit cards means that your credit limit is higher which is good for getting a better credit score. On the other hand, this doesn’t mean that you need to apply for new credit cards. Asking for more credit right before you apply for a home loan may look suspicious to a lender.

4. Any old debts that are in collections should be closed and removed from your credit report if possible. Lenders definitely do not like to see old unpaid debts. This is a red flag for them and could jeopardize your chances of getting a mortgage approved.

In other words, what you should do is to decrease your credit card debt to a more manageable amount and then clean up your credit report. These two steps should help you get a mortgage with the best interest rates.

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Here’s something to think about – excessive credit card debt is not the problem itself, it’s merely the symptom. The real problem is the buy now, pay later mentality. Plastic makes it easy to spend money that you don’t have.

Pre-recession, many Americans were pretty confident about their future earning ability, so much so that they would use their credit card without worrying about how they would pay it off later.

As recently as five years ago, credit card companies could be quite certain that their clients would be able to pay off their debts because less than 5 percent of all accounts were ever charged off for nonpayment. In 2010 that figure rose to 10 percent. This means that approximately one in ten Americans have been unable to pay their credit card bills.

So what’s the solution? People with excessive credit card debt can use credit card counseling, debt consolidation and other such schemes to reduce their debt but this will only treat the symptom, not the problem itself. The solution is to change your spending habits so that you don’t use plastic to buy things you can’t afford.

Here are some simple tips that may help you reduce your credit card debt.

Stop using your credit cards if you already have a large balance on it. If credit cards are just too tempting for you and you tend to go on a shopping binge using your plastic, then close all but one account in case you need it for an emergency.

Some people even resort to drastic measures like freezing their credit card in a block of ice so that they will think twice before using it. This might work but if you are really so addicted to using your credit cards that you need an artificial method of control, you might be better off just closing all of your accounts. This is only for the seriously out-of-control people who spend too much. Generally speaking you shouldn’t have to do this if you can exercise some self-control.

Sell your unused items. Did you use your credit card to buy an exercise machine two years ago but now its gathering dust in your basement? Make some extra money by having a garage sale or sell your stuff on eBay.

Get a second job. If your monthly bills are really too much for you then you may want to consider finding more ways of making money like getting a second job.

The first step to curing your spending problem is to recognize that you can change your habits if you try hard enough. It’s not going to be easy but if you work hard, pay off your debts and increase your savings then you will be much more financially secure.

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Credit card debt is one of the leading causes of financial trouble in the U.S. It has a tendency to creep up on you while you are busy swiping those cards to pay for food, gas, clothing and many other things. If you are like many people, you have always felt a sense of ease when using your credit cards, simply because they are so convenient, and you know you aren’t going to have to pay off the entire bill each month. Perhaps you are relaxed with your current relationship with credit card debt because you have a steady income that covers the minimum payment on your outstanding balance.

You don’t even give it a second thought when you notice one of your cards is filling up to the maximum balance allowed. You reason that you’ve got a couple of other cards you can turn to when that one is completely maxed out. Sure, it’s nice to be so laid back with your spending when you have back up cards. But, what so often happens is that within a year, card number two has reached its limit, and card number three is half full. The problem with this type of credit card balance creep is that it’s leading you steadily into the bankruptcy danger zone.

The amount of money that you are bringing in every month equals the amount of your total available cash flow. This is the money that you have to use to cover all of your personal living expenses, including home mortgage or rent, car payment, food, electricity, other outstanding bills and miscellaneous expenses. Now, add in your credit card debt that probably amounts to several thousand dollars, and you can begin to see that your personal net worth isn’t really what you think it is. Those credit cards you keep on hand to use for just about everything have lulled you into a false sense of financial security.

Every time you swipe that card, you are not only adding to the total principle balance, but the interest due is also growing. With today’s sky high credit card interest rates, a significant amount of your monthly card payment is going only towards the interest. If you’re not careful, you’re quickly going to reach the tipping point where you owe thousands of dollars on several maxed out credit cards, but do not have enough personal income to handle large minimum payments each month. This is when that laid back attitude towards credit card spending is replaced by worry and stress over the huge dent that those bills are taking out of your personal monthly income.

When things get this bad, many people begin considering their options of filing for personal bankruptcy. If your credit spending habits keep going on unchecked, you too may quickly find yourself in this camp. Filing for personal Chapter 7 bankruptcy used to be much easier for individuals and couples who find themselves in deep credit card debt. However, the recent changes to the bankruptcy laws have made it extremely difficult to escape your debts under Chapter 7. Instead, most people are now directed to file for Chapter 13, which means you still have to pay all of your debts owed.

Bankruptcy not only ruins your credit record for 7 – 10 years, but it can also be publicly embarrassing when others find out that you’re completely broke. And, let’s not even talk about employers having access to your credit records where they can find out about this unfortunate situation.

So, how can you avoid getting yourself into a bad financial mess that leads you into bankruptcy? Well, the first thing you need to do right now is to get a handle on all of this easy-going credit card spending you are doing. You need to buckle down and do some serious budgeting and financial planning so that you can keep all of your personal assets right where they belong – in your possession.

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More and more Americans have been racking up huge balances on their credit cards. One survey found that the average household has around$10,000 in credit card debt. Since the interest rate on credit cards is relatively high, from the mid to high teens, having a large balance makes it very difficult to pay off. How can people control their credit card debt?

1. Stop using your credit card for items you can’t afford.

The first tip is to just stop using your credit card on luxury items that you cannot easily pay off. For example, if you want to go on vacation but don’t have the money for it right now, don’t even think about using your credit card to finance your vacation. Save some money up for big ticket items and buy them when you can. Using your credit card for these is bad because it means paying a lot more than the value of the item due to the high interest rate of your credit card.

2. Don’t pay just the minimum.

If you only pay the minimum amount every month then you will be stuck paying only the interest and a very small part of the principal. You could very well end up paying hundreds or even thousands of dollars on interest!

3. Pay off the higher interest cards first.

When you want to pay off you credit card debt, start with the card that has the highest interest rate first. If you are a customer who is in good standing you could try calling up your credit card company and asking for a lower interest rate.

4. Switch to using cash for your daily needs.

It’s just so easy to use credit cards that people tend to spend more when they use plastic and not cash. Try to use cash for your daily needs like food, drink, groceries, etc. This can help you become more aware of how much you spend, especially on trivial or small items such as candy, coffee, cigarettes, bottled water, etc.

5. Get professional help before things become desperate.

If you do get in trouble with very high credit card debt that you can no longer pay off easily, then you should get help right away. Don’t wait until all your accounts are overdue and you are close to bankruptcy.  Credit counseling is one option that you can consider since a credit counseling professional can help you learn how to deal with your credit card debt.  In addition, for people who are having trouble paying their monthly bills, credit counseling can help them negotiate with their creditors to bring down their monthly payments to a more manageable level.

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There is no definite dollar amount of credit card debt that tells you that you have too much credit card debt on your plate. A better way to calculate your financial health is to look at what percentage of your income goes to paying off what you owe to your creditors.

For example, if you make $2,000 a month and $500 of that goes to paying your student loan, car loan and credit card bills every month that means that 25 percent of your income goes to paying off debts.

Too much? One-fourth of your income is definitely a lot. Most financial experts caution that using 20 percent or more of your income to pay off your debt is something you should be concerned about although this is not a hard and fast rule.

So how much really is “too much” when it comes to credit card debt? There are three different points of view about this, enumerated here.

1.) No debt is best.

For some people, any credit card debt is a bad thing. These are the type of people who don’t even use credit cards, or they use them but pay it off immediately so that no balance is kept at the end of the month. They like the convenience of paying by credit card but don’t want to pay interest rates or finance fees so for these people, anything above zero credit card debt is too much.

2.) A little bit of credit card debt is fine.

For many others, a bit of credit card debt is no problem. They carry a small balance on their cars but nothing over 20-30 percent of their credit limit. Anything higher than that will be harder to pay and it may even risk affecting your credit score negatively. These people are cautious but they aren’t afraid of using their credit cards now and then because they are confident they can pay it off easily.

3.) Credit cards are here to be used so up to the max credit limit is fine.

There are also some people who don’t care about how much they charge to their credit cards at all. They are fine with anything under the credit limit. This is a rather dangerous attitude that could lead to trouble in the future because of high interest rates on credit cards.

How Much Credit Card Debt is Too Much?

Although “too much” is really a subjective term, it is easy to tell when credit card debt is spiraling out of control. If your credit card bill is so large that you are constantly struggling to pay the minimum amount each month, then you need to stop and take a close look at your finances and come up with a plan to reduce debt. If you can’t seem to make any headway on your own, you might want to look into some other options like debt consolidation or credit counseling.

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Are credits cards good or bad for you? For many people, it’s both. When times are tough it’s very comforting to be able to use your credit card to buy the things you need. However, that same convenience of use can quickly become a problem. Credit card interest rates are quite high, which makes it very difficult to pay off. So what can you do to pay off your credit card debt?

How to Pay Off Your Credit Card Debt: Goals

There’s only one way to get out of debt – live within your means. Of course, this is easier said than done because it’s hard to stop yourself from buying the things that you want. Credit cards make it easy to indulge yourself with luxuries but these debts can quickly snowball.  If you are not able to regularly pay your credit card bills, this can spoil your credit rating. So before that happens, think about the tips and advice given in this simple plan for getting out of debt.

How to Pay Off Your Credit Card Debt: 7 Step Action Plan

7. Stop buying expensive items you can’t afford.

If you are now in a place where debt is a problem then cutting down on luxuries is a must. Focus on the things you really need. The extra money that you would have spent on frivolous things can be used to pay off your credit card bills.

6. Swap expensive hobbies for lower-priced ones.

Having a hobby is generally a good thing but if it costs so much that you have a hard time paying your bills, you can just swap it for a less expensive hobby.  For example, do you love to do scrapbooking? You can still pursue your interests; just stop using the costliest paper and decorations for your hobby. Recycle stuff instead, it’s good for the environment and your bank account.  To give another example, if you want to exercise to lose weight, don’t go for a gym membership that costs a lot of money. Take up jogging, it’s free and burns a lot of calories.

5. Get a notebook and write down all your purchases.

The little things add up. Sometimes you may not notice that you actually spend a lot of money on everyday items like soda and juice. If you keep a daily dairy you can spot many different ways to save money on small things.

4. Get a debit card.

Obviously, no one nowadays wants to carry a lot of cash around. Since you need some plastic, get a debit card so you won’t have to use your credit card when your cash on hand is not enough for whatever you need to buy.  This is also a good way to keep track of your spending. If you really want to be strict about your budget you can transfer a set amount to your debit card each week. Having no extra money on hand can help you stick to your financial plan.

3. Don’t use your credit card.

This one is quite tough to do when you are struggling to pay the bills because it’s so tempting to just use your credit card and worry about the bills later.  Unfortunately, it’s simply not that easy. Credit card interest rates are quite high so paying the bills with credit cards when you don’t have enough money is like putting fuel on the fire. You will just get deeper into debt.  When you get your debit card, leave your credit card at home. It’s still there in case you need money for an emergency but not having it on hand makes it easier to resist using your credit card.

2. Look for cheaper services.

Bills like electricity, gas, water, phone, cable TV, internet, etc. are so hard to pay each month when you have a lot of debt to pay off. Try switching to a cheaper utilities company or service provider; there are many companies out there that may offer a better service for less money.

1. Sit down and plan your budget.

The top tip is to just sit down, find out where you are in terms of your family or personal finances and create a monthly budget.  Get all of your financial records – your daily spending diary, checkbook, credit card bill, utilities bills, etc.  Separate the essential expenses, like mortgage and utilities, from the inessential ones like restaurant bills and movie tickets.  Total up each list separately. This will tell you how much you really need to spend and what you can cut back on.

How to Pay Off Your Credit Card Debt: Summary and Conclusion

Hopefully this 7 Step Debt Action plan has given you some good ideas.  It’s not easy to cut down on daily and monthly expenses but it can be done. In the end, paying off your debts and becoming financially healthy boils down to just two simple things: keeping track of your expenses and taking control of your spending.

Articles on this site have been acquired from a variety of sources.  No content on this site should be considered financial or legal advice.