Most people carry balances on their credit cards. Those lenders know this and rely on it, that is how they make the bulk of their money. However, carrying a balance can wind up costing you a lot more money in the long run. Below are a few tips to help you to reduce credit card debt.
The first thing you should do is to make sure that you pay your bill each month. Many of these types of lenders have clauses in their contracts with you that state they can raise your APR (annual percentage rate) dramatically if you miss a payment. That means the interest rate they charge you each month will be dramatically higher than what you are paying now, so your bills will be even higher. If you are having trouble paying your bills, contact the lender immediately. Often they will allow you to work out a payment schedule which will not impact your APR.
Next, try to reduce your outstanding balances. When you carry a balance on your card you wind up paying a lot more than just a little bit of interest on the item you are purchasing. Each month you carry a balance, you are paying interest on the interest charges you accrued previously. That is compound interest, and it really adds up over time. Is that thirty dollar item really worth a few hundred dollars? It can actually wind up costing you that much if you only pay the minimum each month.
Another thing to consider is switching your balance to a credit card that offers a lower APR. Before switching though, contact your bank and negotiate with them. They probably want to keep your business, and may be willing to match the offer you have from another bank for a lower APR. If not, consider switching. Just make sure to read the fine print. Often the banks offer an introductory APR for balance transfers, but that rate goes up dramatically after 6 or 12 months. If the later rate is higher, it might not make sense to make the change. Make sure to read the paperwork!
Finally, the hardest step... do you really need to buy that? Look at ways to reduce your spending for a while until you make inroads on your outstanding balances. The best way to reduce your credit card debt is to stop spending. Obviously there are things you absolutely need to buy: food, gas. But you can probably get away without that new pair of shoes, at least for the next month or two. If you delay your discretionary purchases for awhile, you can apply some of that money to your outstanding bills. Sure it is more fun to buy something than to save money, but you probably do not "need" that 50" LCD plasma HDTV right now. Your regular television probably works just fine. (And do not forget, HD reception costs more from your cable or satellite provider than "regular" television.)
Ultimately, you will rest much easier if you reduce your credit card debt. It is worth looking at these strategies and trying to implement them.
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