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Eight Essential Tips for Reducing Your Credit Card Debt

An Experienced Credit Counselor Shares Debt Reduction Strategies That Work

If you’re struggling with high-interest credit card debt, you already know that it can quickly become overwhelming. A high balance – combined with sky-high interest

It’s all too easy to let fear and anxiety take over. But if you dream of a debt-free future one day, it’s time to get serious about paying down your debt. Not sure where to start? Here are eight tips you can take to start whipping your credit card debt into shape, courtesy of American Credit Foundation, a nonprofit credit counseling service.

The credit counselors at American Credit Foundation have helped tens of thousands of clients pay down their high-interest credit card debt. Their secret? According to Scott Peterson, the organization’s president and co-founder, the key is to look at the whole picture, from spending habits and budget to monthly payments and interest rates.


Tip 1: Know what you’re dealing with.

“You can’t get a solid debt reduction plan in place until you know how much you owe, down to the penny,” Peterson says. “Grab a pen and paper, and make a list of all of your credit cards and the balance you owe on each one – and don’t forget to make a note of the interest rate, too.”

Tip 2: Optimize your interest rate(s).

Peterson says that for clients carrying a high balance, interest payments can present a real challenge, preventing them from making any real progress. That’s why it’s always helpful to pursue a lower interest rate.

“There are two ways you can get a lower interest rate,” he says. “You can apply for a balance transfer with a low or zero-percent interest rate. Or you can simply call your credit card company and ask for a lower interest rate.”

In both cases, Peterson says, the goal is to get a break on interest payments. This can help you ensure that more of your money goes to your principal balance, which, in turn, can help you pay down your debt more quickly.

Peterson is quick to point out that the likelihood of getting a balance transfer or a reduced interest rate depend mostly on your credit history. “Folks who have a strong track record of paying on time and carrying a low balance are more likely to get approved than people who have a history of late or missed

Tip 3: Assess your spending habits.

Any experienced credit counselor will tell you that any good debt repayment plan begins with a long, hard look at your spending habits. “If you don’t know how and why you got into debt into the first place, you’re more likely to repeat the behaviors that got you in trouble,” Peterson says.

Although everyone’s debt situation is a little different, there are a few fairly common behavior patterns that can lead to debt problems. For example, people who tend to spend emotionally are more at risk. So are people who don’t have cash to pay for unexpected expenses like car or home repairs.

“Debt problems often begin when folks treat their credit cards as another source of income,” says Peterson. “They don’t have any savings or an emergency fund, so they rely on credit.”

Tip 4: Review your budget – or create one.

A good budget is the foundation of any successful debt repayment plan. In its simplest form, a budget should help you see how much money you’re bringing in each month and how much is going out. Ideally, you want a budget that covers all of your essential expenses but also leaves you with a nice chunk of extra cash that you can use to take a bite out of your credit card balance(s).

Peterson cautions people not to get too focused on perfection – especially if you’re new to budgeting. “You will probably make mistakes,” he says. “You’ll budget too much for groceries or forget about the fee for your kids’ soccer team. And that’s okay. The great thing about a budget is that it’s not set in stone. If something isn’t working, you can go back and tweak it until you get it right.”

Although some expenses  – like rent or mortgage and utilities –  are fixed and don’t change from month to month, you may find other areas to trim your spending. “It’s about finding places to free up some extra money,” Peterson says. “Can you cut a $20 off of your monthly grocery tab? Can you cut the cord on cable TV? Do you need to pay for a land line AND a cell phone? That’s all money that you could use for debt repayment instead.”

Tip 5: Check out a few debt repayment strategies.

A quick Internet search will deliver hundreds of different tips and tactics for paying down debt. Some experts swear by the “snowball” method, while others are firmly in the “snowflake” camp. Others eschew the cutesy names and focus on just-the-facts efficiency.

Read up a little on the strategies that sound most appealing to you. What do you like about them? Do they sound realistic? Do they provide a clear roadmap to a debt-free future?

“The key is finding the budget that will work for you,” Peterson says.

Tip 6: Consider credit counseling.

A credit counseling service like American Credit Foundation can be a powerful and helpful ally in your battle against high-interest credit card debt. A credit counselor can help you assess your spending and debt, create a budget that works for you, and he or she may even set you up with a debt management plan, or “DMP.” In most cases, a DMP helps you secure a lower interest rate and lower monthly payments, and it puts a stop to late fees and debt collection calls.

But remember that credit counseling isn’t a quick-fix. “Credit counselors aren’t magicians,” Peterson says. “We can help make your debt more manageable and we can help lower interest rates – but we can’t make your credit card disappear. Use your common sense when you select a service. If it sounds too good to be true, it probably is.”

Tip 7: Stop using your credit cards.

If you’re serious about getting out of debt, you must stop using your credit cards. This is essential, no matter what repayment strategy you choose, and whether you choose to work with a credit counselor or go it alone.

“You can’t get out of debt if you keep using your credit card,” Peterson says. His advice? Make it difficult to use your credit cards: If you typically carry your credit cards in your wallet, take them out and put them in an out-of-the way place. If you have your credit card numbers on file with online retailers (think or iTunes), delete them.


“If you need to buy something, pay cash or use your debit card,” Peterson says. “And if you don’t have the money? Don’t buy it.”


Tip 8: Don’t give up!

It’s not easy to repay debt – and the higher the balance, the harder it is. But it’s not impossible. Stick to your budget. Stop overspending. And remember that it’s okay to ask for help if you need it.


“I think sometimes people are embarrassed to talk about money problems,” Peterson says. “But trust me: You’re not alone, and there’s nothing wrong with asking for help. And remember: You can’t always tell who has debt problems and who doesn’t.”


Need help dealing with your credit card debt? Contact American Credit Foundation today for a free, no-obligation consultation. To learn more, call American Credit Foundation toll-free 1-800-259-0601 or visit the website and fill out this simple form.

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