How to Lower Credit Costs and Payoff Debt (Quick Steps)

Credit cards and other debts can carry very high interest rate terms. For high interest debt, most of the money you pay monthly is used to pay interest. The goal in reducing credit cost is to pay more towards the principal of the debt. These are some quick steps to lower credit cost and payoff your debts.

Difficulty: Easy

Instructions

1. Check your credit report every six months instead of once a year. The report can be obtained for free once a year at Annual Credit Report.com. There is a fee if you request more than one report per calendar year. You can also call or visit the sites of the credit agencies directly: Experian, Equifax and Transunion.

2. Review the credit scores from each agency. Understand why you may have low scores. Visit Myfico.com to learn more about the meaning of your credit score numbers. The more you know how credit scoring works, the better able you'll be to manage debts.

3. Review all outstanding balances with each creditor and note the interest rate being charged by each. Payoff the balance with the highest interest rates first, followed by the next highest ones.

4. Apply for a credit card with a lower interest rate to lower credit costs. Shop around for a better rate. Look at credit unions and community banks; these generally charge lower rates. Use this card to transfer the high rate debts. Don’t use this card for new purchases.