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Did you know the average amount of credit card debt is nine-thousand dollars per household?
We are a nation that has spent beyond our means. Consumers are finding themselves faced with the debt – and it is time to pay our debts. Credit cards have average interest rates of fifteen percent, department store credit cards have can be upwards of twenty percent.
Credit card debt can occur for a variety of reasons. An increase in expenses or an illness within the family can create a rise in expenses that require credit cards to be used as an emergency fund.
Now that we are in this debt consumers are posing the question of how to get out. Use these ten tips to deal with debt repayment in the quickest way possible.
Ten Tips to Cut Credit Card Debt
1. Pay off high interest credit cards first.
The higher the interest rate the higher the monthly payment.
2. Contact the lender to negotiate a lower interest rate.
Often, if a consumer has a positive credit history with the company and a median to high FICO score than the interest rate can be reduced up to five percent.
3. Consolidate your balances.
Consolidation loans can save thousands of dollars in payments as several payments are reduced into one lower interest monthly payment.
4. Transfer your balances.
Balance transfers and a strict budget plan can benefit the consumer with introductory low, or zero interest rates for periods of six to nine months.
5. Implement a plan to create a savings account.
Experts recommend that a savings account allows the consumer to avoid credit card use, which will mean the avoidance of credit card debt. The savings account becomes the smart alternative to using credit for emergency expenses.
6. Stop using credit!
Once you are in debt, you need to stop using the credit cards as they can just cause more problems. Cut back on your non-essential spending. And use cash to avoid creating more debt.
7. Avoid fees!
Late payment fees, cash advance fees, annual fees, etc. They all add up, and get added to your balance. Who wants to pay interest on unnecessary fees.
It is better to avoid these fees entirely.
8. Make a repayment plan.
Establish a repayment plan that includes a maximum of fifteen percent of the consumer’s income. This will ensure that these repayments will continue until the loan is repaid in full.
9. Increase your income.
Think about working as an Uber driver after work or applying for a part time job at the mall. Then use the extra cash to pay down your debts.
Applying extra money to the credit card debt will mean that the principal of the debt is being reduced. Once the principal becomes reduced, than the interest rate will be lower as the interest rates are based on the amount of the principal.
10. Pay more than the minimum payment each month.
Paying the minimum payment to the balance of the credit card could increase the repayment schedule to years, rather than months. Consumers that pay the minimum monthly interest payments