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Eight Essential Tips for Reducing Your Credit Card Debt

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.

Personal FinanceIt’s time for a new game plan. Not sure where to start? Here are eight tips you can take to start whipping your credit card debt into shape, courtesy of DebtGuru.com, a non-profit credit counseling service.

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. Grab a pen and paper, and make a list of all of your credit cards and the balance you owe on each one.

You should make a note of each card’s interest rate, too – this will be important for the next step.

Tip 2: Optimize your interest rate(s).

Interest can be a killer when you’re carrying a large credit card balance, so it’s worth your while to look for ways to minimize the amount of interest you pay each month.

There are two ways you can do this:

  • You can apply for a balance transfer. As the name suggests, a balance transfer allows you to transfer your balance from an existing credit card to a new credit card. This can be useful because most balance transfers offer ultra-low or zero-percent introductory interest rates. These rates typically last for a set amount of time (often around 12 months), which gives you time to take a bigger bite out of your principal balance. Keep in mind, though, that this is only a good idea if you think you can pay your balance off during that period – otherwise, you’ll be back to square one.
  • You can ask for a lower interest rate. It sounds ridiculously simple, but it never hurts to call your credit card’s customer service line and ask if they can give you a break.

It’s worth mentioning that both of these options will depend largely on your past credit use. A person with a strong track record of making payments on time will have more luck than someone who has a history of late or missed payments. But it doesn’t hurt to ask – especially if you’ve got a card or two with very high interest rates.

Tip 3: Assess your spending habits.

Before you start making a plan to tackle your debt problems, you should take some time to take a look at why you’re in debt: Is your credit card debt the result of unchecked impulse buying or emotional spending? Did you rack up a balance paying for emergencies, like major home or car repairs? Are you treating your credit cards as additional sources of income?

Debt problems usually go beyond simple dollars and cents. If you can identify and understand the underlying cause of your credit card debt, you can work on changing your behaviors and avoid future debt problems.

Tip 4: Review your budget – or create one.

A good budget is the foundation of any successful debt repayment plan. In its simplest form, your 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).

See what you can do to free up a little extra money? Most likely, you have some expenses – like rent or mortgage and utilities – that are fairly fixed. But you may find other areas where you can trim your spending. 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?

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?

Tip 6: Consider credit counseling.

Still feeling overwhelmed by your debt? It may be time to call in the experts. A non-profit credit counseling service like Debtguru.com 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.

Tip 7: Stop using your credit cards.

This one is critical, whether you choose to go it alone using the snowball method or choose to work with a credit counselor. If you’re serious about getting out of debt, you have to stop using your credit cards. If you typically carry them in your wallet, take them out and put them in an out-of-the way place. If you have your card numbers on file with online retailers (think Amazon.com or iTunes), delete them.

Need to buy something? Pay cash or use a debit card. 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.

Need help dealing with your credit card debt? Contact DebtGuru today for a free, no-obligation consultation. Call 1-888-631-4044 or visit the website and fill out this simple form.

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