Credit Card Debt Reduction Part 2

If you want a credit card debt reduction plan, here's a selection of powerful techniques to reduce the amount that you owe on your credit cards. Each of these ideas will work individually, but if you want to speed up your credit card debt reduction, it's best to implement a range of these techniques.

5) Avoid Unnecessary Fees And Penalties

It pays (literally!) to know all the terms and conditions of your credit card agreement. Find out all the ways it's possible to incur additional fees and penalties...and then take steps to avoid them.

Know your credit limit and stick to it. Know the minimum monthly payment and when it has to be paid by. To make sure, you could set up an automatic payment from your bank to your credit card account every month. Set a monthly sum that's bigger than the minimum amount required. That will prevent any penalties for late payments. You can then pay extra towards your account as and when you have extra cash available.

As far as the annual fee is concerned, this is just blatant profiteering by lenders. If your can has an annual fee write to your lender asking for it to be waived. If they don't agree, move your debt to a card provider that doesn't operate an annual fee.

Lenders make billions every year from basic interest payments alone, don't give them the jam on top as well.

6) Focus On Repaying Higher Interest Credit Cards First

If you have more than one credit card account, take a look at the rate of interest that applied to each card. Use the Annual Percentage Rate (APR) to sort out the cards with the highest to the lowest rate. Once you've done everything that you can to reduce the interest rates, focus on repaying the cards with highest APR first.

This means paying the monthly minimum on every card, then using the rest of your monthly repayment money to reduce the debt on the highest interest card. In the long run, this will reduce the overall amount of interest that you have to pay, and will speed up your credit card debt reduction.

It's also worth bearing in mind that credit cards sometimes charge different amounts of interest on different types of debt. For example, balance transfers might receive a special low rate, while new purchases will be charged at a the lenders standard (and usually higher) rate. It's worth taking this into account when ranking your credit cards according to their interest rate. 7) Free Up Other Money Think of different ways to increase your income and free up extra money to pay down your credit card debt.

Could you work more hours, claim any overtime or extra responsibilities. Or how about a second job for a few months?

Alternatively, have you got any assets that could be used to reduce your credit card debt? Have you got anything to sell? Or have you got any money sitting in a savings account? It makes no sense to be paying interest at a much higher rate on your debts, while you have savings that receive a low rate of return.

Every extra cent that you can throw at your debt will speed up the repayment period and save you money on interest.

8) Consider Consolidating

If you own a property, it's possible to consolidate your debt at a much lower rate of interest by securing the debt over your house. Of course, if you take this option, your home will be at risk if you fail to keep up with the repayments.

If you don't like the sound of this option, it's still possible to wrap up your credit card debts at a lower rate of interest with an unsecured personal loan.

9) Consider Debt Reduction

Unlike debt consolidation, which negotiates a lower rate of interest over a longer period of time, debt negotiation involves negotiating to reduce the overall amount of your debt with your lenders.

The basic idea is simple, you select a agent to deal with your lenders. They contact your creditors and make an offer of reduced payment on your behalf. In many cases, the lender will accept the reduced amount if there is little prospect of them receiving the debt in full.

However, this option will severely damage your credit score. It will have major consequences for your finances for the foreseeable future. So in most cases, this option is usually chosen as a last resort for people who reach the stage where they can't even afford the monthly interest on their credit card debt.

10) Focus On The Future

If you've ever thought "I wish I had more money", consider this;

Let's say you have credit card debts of $20000. Which means a minimum monthly repayment of (at 3%) $600. But if you didn't have that debt to repay, you'd have $600 of free income every month. That's $7200 a year. Free income for you to spend or save as you choose. That's one of the major benefits of clearing your credit card debt. And just consider how much "extra" income you'd have if you owed $30000, $50000 or even more.

So if you need any motivation to get out of debt, just think about the amount of your income that will be freed up.

Click Here For Credit Card Debt Reduction Techniques 1-4

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