Top Five Ways You Can Reduce Credit Card Debt

Top Five Ways You Can Reduce Credit Card Debt

While your credit card is a valuable asset, it also can be the source of potential trouble as well since it is very easy to fall behind on your payments. Every year, many thousands of people fall into deep credit card debt and for some it can take years to dig out.

Fortunately, there are ways to keep yourself from falling into debt if you are careful. The key is to keep in mind the concept of living within your means and understanding the true nature of credit cards. In this manner, you can keep from having too much debt piling up so you can maintain a good credit score.

Use Cash

A method so simple that it can save you from falling into credit card debt. Take out enough cash to pay for what you need every day and do not use your credit card. This means paying for gas, food and other items as well.

Two Credit Card Limit

One issue that many people have is piling up the credit cards which in turn makes it easier to fall into deep debt. Instead, keep the number of credit cards you have to two. You will use one to help build your credit rating and the other for emergencies or when you need to make a quick payment before your paycheck arrives.

The card you use to build your credit score is one where you take out a certain amount of money and pay it off over a few months. That demonstrates that you can pay off debt which in turn builds up your credit score.

Pay at least 20% more than the Minimum

You have probably heard the stories of how only paying the minimum will mean that it takes years to pay off your credit card debt. You can shorten that time considerable by adding 20% to your payments which will cut down on that time considerably. Keep paying it down until it is gone.

Transferring your Debt

This is a rather simple, but effective technique in reducing your credit card debt. Take note of the interest rates on your credit cards and if you find another that offers a lower amount, see if you can transfer what you owe to that new account. A reduction of just a few points may result in saving hundreds of dollars in paying off your debt. Once you pay off the debt on one credit card, cancel it and cut up the card so it can never be used again.

Live Within Your Means

Too many people have the mistaken view that credit cards extend their purchasing power. Actually, it can restrict it in many ways, especially if you build up your debt. At first, it may seem that having the ability to purchase more expensive items immediately is a blessing, but the truth is that unless that item is going to pay for itself at some point you have just racked up more debt. So, only use credit cards when there is no other choice and live within your means.

These five tips can help you keep out of dangers of too much credit card debt so you can live happier and financially healthier.

One thought on “Top Five Ways You Can Reduce Credit Card Debt”

Leave a Reply

Your email address will not be published. Required fields are marked *