WASHINGTON – The way the economy is today with all the unemployment, credit cards can be a common staple in personal finances. Americans are finding ways to lower the stress level. While credit cards are great for many things, the risk of debt is very high. What can you do to minimize credit card debt risk?
Don't Just Pay The Minimum Payment
A large credit card balance comes with large interest accumulation. Interest is the most common way consumers get trapped into high credit card debt. Depending on the interest rate of your credit card, the interest may end up being worse than the principal balance.
To reduce debt and minimize risk of compiling interest, your monthly payment on each credit card should be higher than the minimum payment. The credit card company's minimum payment will, in some cases, only pay down the interest on the card (leaving the principal balance untouched). Because of this, the actual credit card debt will never be paid off.
If Your Balance Is Too High, Work Out A Deal
Another little known tactic to deal with high credit card debt is very simple, but often overlooked. Many consumers find great worth in approaching the bank via telephone or mail. Often banks may be willing to “settle” the credit card debt for an amount that is lower than the actual balance. The success of this method will depend on the bank and on your negotiation tactic.
Do not go into the negotiation angry or hostile. Do not expect the bank to forgive all of your debt and be open to a smaller amount. Typically, you will need to be 90 days past due for this method to work. As a summary to all this; there are a few little known and easy steps that can be used to reduce credit card debt. Two common methods, discussed below, include paying more than your minimum payment and negotiating a settlement offer with the bank.
Don't Just Pay The Minimum Payment
A large credit card balance comes with large interest accumulation. Interest is the most common way consumers get trapped into high credit card debt. Depending on the interest rate of your credit card, the interest may end up being worse than the principal balance.
To reduce debt and minimize risk of compiling interest, your monthly payment on each credit card should be higher than the minimum payment. The credit card company's minimum payment will, in some cases, only pay down the interest on the card (leaving the principal balance untouched). Because of this, the actual credit card debt will never be paid off.
If Your Balance Is Too High, Work Out A Deal
Another little known tactic to deal with high credit card debt is very simple, but often overlooked. Many consumers find great worth in approaching the bank via telephone or mail. Often banks may be willing to “settle” the credit card debt for an amount that is lower than the actual balance. The success of this method will depend on the bank and on your negotiation tactic.
Do not go into the negotiation angry or hostile. Do not expect the bank to forgive all of your debt and be open to a smaller amount. Typically, you will need to be 90 days past due for this method to work. As a summary to all this; there are a few little known and easy steps that can be used to reduce credit card debt. Two common methods, discussed below, include paying more than your minimum payment and negotiating a settlement offer with the bank.