Archive for July 25th, 2007

Tips To Minimize Credit Card Debt

Credit card debt is the Number One of debt issues that is not just affecting American households but worldwide in general. Many people are drowning into credit card debt and find themselves hard to get rid of it. If you are in the same situation, praying and hoping for helps from money falling from sky will not save you from continue drowning in the sea of debt. You action to start a debt elimination plan in place is your only way to save yourself from your debt issue. Here are 2 tips to minimum your credit debt that you should consider in your effort of get rid of debt.

1. Don’t Add New Debt While Clearing Your Old Debt

Every one likes to use credit card for purchases because it’s convenient and easy, until you forget about how much money you have in you account and overspend your money. When credit card bills come, only you realize that you have not enough money to pay the amount stated in your credit card statement, you have no choice but paying minimum due to fulfill the credit card agreement requirement. Later, you go out from shopping, again you forget about your financial status and spend again with your credit card.

If you continue this spending behavior, your credit card debt will continue to go up instead of reducing the amount. There is no way to get rid of you debt if you don’t get rid of you credit card first. Hence, if you find that keeping away your credit cards are too hard, take a dramatic action by terminating all your credit cards and exchange them with debit cards so that you only can spend up to the limit where your checking account allowed. Before you call up the banks to cancel your credit cards, read the fine print of your credit card agreement first because some banks will increase your credit card interest rate if you cancel their cards with balances.

The first action to get rid of your credit card debt is to get rid of your credit cards so that you can avoid from adding new debt into your existing debt amount.

2. Minimize The Interest Rate & Avoid The Finance Charges

Credit cards carry different interest rates. If you pay your credit cards’ balances in full each month, then, you don’t really need to care about the interest rate. But, now you are in debt, every extra of interest rate will make you pay more. Hence, list down all your credit card debts and their balances. There are a few options that you can use to minimum the interest charged to your debt. Credit card debt consolidation into few cards with lower interest rate is one the options. Another way is getting a debt consolidation loan which has lower interest rate to pay off your high interest credit card debt. After the credit card debt consolidation, your credit cards now have a full credit limit again. Don’t let yourself be trapped into new debt with these credit cards again.

By combining all your debts into single debt under debt consolidation process, you will have a better focus to pay of your credit card debt and transferring from high interest debt to lower interest debt will save you a good amount of interest. With debt consolidation, your overdue debt will reset back to current and help you to avoid paying the overdue or delay finance charges.

Summary

Credit card debt can be built up really fast, but it won’t go away that quick and it won’t go away if you have done nothing to resolve it. The first step of get rid of your credit card debt is reducing it by avoiding new debt added to it and minimum the interest from rolling up your debt.

Add comment July 25th, 2007

Credit Card Debt Reduction Strategy - A Simple 3 Step Mantra

Sometimes, you know things are quite uncontrollable. Einstein was once asked by someone as to what according to him was the greatest force. And in his humor, he had replied, Compound Interest. Now that is precisely what hinders, and to a great extent pulls you down in your attempts to formulate and execute any credit card debt reduction strategy that you think is your “damnedest best”!

No, I do not mean to sound like that, but the thing most people do not understand about debt reduction solution is that your efforts to reduce the credit card debt or pay them off is seriously devastated by interest on your balance. If you don’t know how to proceed exactly, you will find yourself deep in debt - even if you had tried very hard to divorce your credit card!

One of the main reasons people don’t succeed in paying off credit card debt is inconsistency and impatience. Aside from that, in many cases, I’ve found that people are not especially calculative about their debt reduction strategy. Here’s a plan that works wonders when you follow it seriously…

I call it the 3E formula. Estimate, Enumerate And Execute.

1. ESTIMATE
Number one thing you need to do before you actually start - and if you wish to have a great start - is to estimate the total debt, the APR or the EAR (rates of interests), and other such trivial and important details. That is the first and best part of any debt reduction strategy or plan. Once you estimate and understand your position, you will know how long you need to be patient and put-in the effort.

Remember, no debt is non-eliminateable - if that word exists. You can eliminate every debt, but by constant efforts. Estimate.

2. ENUMERATE
This is a number game. Supposing there’s an amount of balance that seems frightening, we tend to move away from it - and in the process, do not pay up at least (and even) a part of it. What happens then is that as Einstein said, compound interest increases the balance and in the end, you have got a terrifying amount. If the initial balance was frightening, this one was terrorizing!

What you need to do here, is to find out an approximate percentage of the balance - say about 3-8% - and pay that every month. That way, you decrease the balance for which the interest is calculated and thereby, the percentage of amount you pay also decreases! And by the end of an year or so, who knows? You might just become a debt-free man or woman!
Enumerate!

3. EXECUTE
This is where most of the credit card debt services tend to lose their reputation. Psychologists say, you need to be motivated bluntly to get you started in the actual process of “credit card debt pay off”. I do not completely agree with them, but I think sometimes they are wiser. So, here I am, forcing you plainly, screaming in your face bluntly, GO AND DO IT.

Start your game today, and you will be debt-free soon. Think about doing it tomorrow, and you are lost. Which do you wish to be? A Winner or A Loser?

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