How to Manage Credit Card Debt Interest

Americans and others are swimming in a sea of high interest credit card debt at often unmanageable levels. This article gives the steps to take to reduce credit card interest and start cutting interest rates and manage debt better.

Difficulty: Moderately Challenging

Instructions

1. The first step is to list all credit card debt. List other debt as well if you like. Write down the amount owed and the interest rate. The interest rate is vital. Many cards have raised interest rates and borrowers are not even aware if they don't track it on monthly statements. Many planners say pay off the lowest dollar amount card first. This is not bad advice, but I recommend paying the highest interest rate card first. Save the money to pay more principle next month.

2. Stop using cards for daily purchases if you can't pay the card off in full every month. A friend went as far as freezing (literally) his credit cards in a bread pan in his freezer. He wanted to make sure he did not have the card is his wallet for impulse purchases. If it was important enough to take the pan out of the freezer and thaw it out to get the credit card then it was worth charging. Otherwise wait for funds or pay with cash. He is now done with new credit card debt completely and making progress towards paying cards off every moth.

3. Make balance transfers. New card offers are not as common as they were a year or two ago, but they are out there. If you can transfer your highest rate balance to a new card or even part of it and save interest every month do it. Take any fees into account. Make sure you save, but this is a great tool to reduce principle. Less goes toward interest and the card is paid down a bit more each month. If you have a card with room for a transfer call and see what rate they would give if you transferred another cards balance over. Some will even raise your credit limit to allow a larger balance transfer. Make the call. Most cards will transfer from a competitor if your income and credit are within their guidelines.

4. Call cards that you have and ask if they can lower your interest rate. This is simple, it will not always work, but when it does it will save you substantially on interest and free up cash flow to pay the cards down faster..

[jenng]

on 9/10/2009 Great article on How to Manage Credit Card Debt Interest 5*