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Credit Cards 101Reducing Debt Even if You Don’t Have Any Cash SavingsBy Kristie
BillSavings.com Brief:
Even if you do not have savings, you can reduce your credit card debt. By taking the necessary steps, you can get your credit card debt under control. Stop spending. Find a credit card with better terms and conditions or cancel your credit cards, cut them up and throw them away.
If you are in a situation where you are in credit card debt and do not have savings or cash equivalents to reduce or pay down the debt, you still have options. It will take a little work on your part to make it happen, but you have a few options to consider. First, you will need to reduce your spending. Second, you need to figure out how to increase your disposable income, which you can do by reducing your spending or by earning more money. Reduce your credit card debt Getting your credit debt under control can seem very overwhelming, but there are ways that you can do it. The first thing that you need to commit to doing is to stop spending. Adding more charges to a current growing balance on your credit card can just make the debt situation worse. There is no grace period for finance charges, so as soon as you spend the money you are accruing interest. So while you are taking the necessary steps to reduce your credit card debt, stop using your credit cards. There are other steps to take to manage credit card debt, which will help you to keep your financial situation under control while you work on paying off the debt. Slow the growth of credit card debt There are thousands of companies offering credit cards. This means you have options beyond the credit cards in your wallet. So if you are paying 18% on a credit, look for credit card options that reduce your interest rate as low as possible. By finding a credit card with a lower interest rate, you can transfer your existing balance from a higher rate credit card to a lower rate credit card. This step will reduce the growth of your credit card debt. So how do you find a new credit card with a lower interest rate? Again, you have options. Keep in mind that qualifying for a lower interest rate credit card may require good credit and a certain level of income. If you do not have good credit and sufficient income to qualify, you may have to work a little bit harder to cleanup your credit before qualifying. Search online: On your hunt for low interest rate credit card (or at least a lower interest rate credit card than what you have now), one of your first stops is online. You can find credit card special offers at BillSavings.com. Introductory rate offers: Many credit card companies offer low introductory interest rates at a fixed rate for a certain period. These timeframes can range from six months to one year. If you have a plan in place that allows you to pay off the entire balance during the low introductory period, then you may want to consider one of these offers. The low interest rate will accomplish two of your goals – slowing the growth of your credit card debt, allowing you to pay off your debt. If you are not able or willing to pay off your debt during the introductory period, then this is not a good option. Call existing card companies: Once you have shopped around and made a list of your options, call your existing credit card companies. Tell them you have an offer for a lower interest rate with another credit card company and you want to see if they will at least match the new terms before you take your business elsewhere. The worst that they can say is no. They may be willing to agree to the new terms in order to keep your business. Terms and conditions - understanding is the key You have probably heard the old adage, "If it sounds too good to be true, then it probably is." This is a warning that you need to be sensitive to when you are shopping for credit credits. There are terms and conditions of the card that go beyond the attractive low interest rate. For example, with introductory rate credit cards, if you make a late payment (even one time), the interest rate will automatically go up to the standard rate. This means you can easily go from paying the low 1.9% introductory rate one month to pay 18% the next month. So it is important to read the fine print and make sure that you understand all of the terms of the card. Other terms to be aware of include:
No one credit card is perfect for everybody. This is why it is important to know and understand the terms and conditions of any credit card before you decide to carry it in your wallet. Cancel your cards Sometimes it is necessary to cancel your credit cards, cut them up, and throw them away. If you find yourself without the willpower to stop spending and to get your credit card debt under control, then this may be your only option. When you make a purchase, you will be more apt to buy within your means since you will not have plastic to charge it. For big ticket items like cars, shop around for a consumer loan that is right for you instead of just letting the dealer give you the "no verification" loan through the dealership that may have a much higher interest rate. Even if you do not have cash savings to pay down or pay off your credit card debt, you still have options available to you to get your financial situation under control. Your first step is take control. Stop spending. Find out what options are available to you to reduce your credit card debt and then take the steps necessary to pay off the debt, whether it means transferring your credit card balance to a lower interest rate card or cutting up your credit cards and canceling your accounts.
5/30/2008
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