How to Reduce High Interest Debt

High interest debt is becoming more and more easy to accrue. We're given credit cards before we've grown into financially responsible adults OR we're loaded down with an emergency car repair or a needed vacation that ends up costing more than we have. With these easy steps, you can cut your high interest debt significantly! Within 6 weeks, you'll be on a path to better financial health and more peace of mind.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Internet Access
• Reasonably Good Credit
• Paper
• Pen

1. Call your Credit Card companies!
   Most companies want you to pay your bills and will be willing to negotiate with you on your card's percentage rates. This is highly possible if you've been good about paying on time for at least 6 months.
   Sample script: Hi, my name is ____. I've had an credit card account with you for 3 years and I've paid on time for the last 6 months. I'd like to request that you lower my APR rate. What lower rate can you offer me?

2. Make a budget.
   This is hands-down the most important thing you can do to keep your spending in check and to show yourself how you can live within your means. This will also allow you to maximize payments to your cards to bring the high interest charges down as well.
   Here's a suggestion for one that's free and easy to get your started.
   http://www.getrichslowly.org/blog/2007/03/26/a-simple-budget-spreadsheet/

3. Look around for 0% APR credit cards.
   These may be for a limited term (6 months) or even better, for the life of your transferred balance. If you're on track with a budget, you can tighten your belt during the period of time you have the low APR and pay it down! Check the fine print for transfer fees.* AND, you must remember to pay these new accounts ON TIME or the fees will rise even on the first missed payment.*

4. Correct your mistakes.
   If you've made a late payment in the past few months, you may call your credit card and ask them to forgive the late fee (which may therefore stop them from raising your APR). The same thing applies to your bank account. Call, ask. If they say no, ask to speak with their supervisor. If they say no, ask to speak to their supervisor...etc.

5. Build an emergency fund.
   Life has many unexpected twists and turns. Plan ahead by saving a little bit from each paycheck BEFORE you spend it all. I love using ING direct to transfer a small amount ($50) into a savings account every time I get paid. This will help you be prepared the next time something comes up.

Tips & Warnings

• Sometimes banks charge a transfer fee. This may be a dollar amount or a percentage of the balance. It is almost always STILL a good idea to go forward with signing up for a lower-APR card.
• You must make payments on-time! If you miss a payment on one card, that may entitle your other cards to raise their rates as well - even if it's with a different company!

[pianistic]

on 5/28/2008 Great!