How To Pay Credit Card Balances Down

Introduction

Credit debt is big problem for many Americans, with the average credit per household rated at $15,956. Delaying or defaulting on your credit card payments will often result in a higher interest rate and penalties from the card issuer. Here are some steps you can take to pay credit card debt, and live a more stress-free life:

Step 1

Pay Your Credit Debt in the Right Order
People who are servicing more than one type of credit card debt with often feel overwhelmed as to what order they should pay credit card debt. Some pundits will argue that you are better placed to pay off the smaller balances first and then proceed to the bigger ones. This, they argue, will give card holders a psychological boost for finishing off their payments on smaller debts. The only problem with this type of logic is the financial cost of neglecting bigger debts. The interest you are charged on bigger debts will be a lot bigger than that charged on smaller debt.

Step 2

Use Your Savings to Pay off Your Debt
It is not uncommon to find some people who have a good amount of money in their savings account, while still maintaining credit card debt. The overriding factor for maintaining a savings account would probably be to keep some money aside for emergencies. However, if one is to look at the cost of maintaining high interest debt (17%) versus the benefit of maintaining a low interest savings account (2%), then it goes to show that you will be better off financially by pay credit card debt using those savings. Once you clear your debt, you can start to build your savings again for emergencies or use your credit card if an emergency happens sooner.

Step 3

Negotiate With Creditors
Creditors are always more than likely to negotiate with the debtors in the event that they are finding it difficult to service their debt. Don’t feel shy about talking to card issuer about your payment problems, they will more than likely here you out. Call each and everyone one of them up, and request to pay credit card a certain amount per month. Once you come to an agreement, make sure to have it down in writing before making any payments.

Step 4

Consolidate Your Debt
Using a debt consolidation loan will often result in lower monthly payments. Compute the average interest on your credit card debt and look for a loan with a lower interest rate. This will make it easier for to manage the debt as you pay credit cards.

Step 5

Sign Up for a Credit Counseling Service
Credit counselors are often better equipped to negotiate a lower interest rate and payments from your creditors. They can also help to form a budget as you pay credit card debt and teach you money management skills.

Tips

Transfer Your Balances
If you have a good credit score than you transfer your credit card debt into one credit card, which would charge you a lower interest rate on your pay credit card debt.

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