Throwing money at you’re debt is like going on a crash diet. If you don’t plan well you may end up back ware you were or even in more debt. Here are some good questions to ask you’re self before you start planning.
How many credit card accounts do you have?
What is the interest rate on each card?
Which one do you owe the most?
How long has the account been open?
The next step is to figure out a manageable plain that will get you out of debt. You may want to look into some of the financial software packages such as Microsoft money or Quicken.
You should pay off the card with highest interest rate first, or a debts that are delinquent or about to be written off. After you have paid off the one with the most interest then go to the next highest, and so on. If you want to have the good feeling that comes from success, pay off a card with a low balance. The good feeling you get from getting out form one debt may just give you the motivation to take care of the rest of you debt.
Reduce the amount of interest you pay.
Most credit cards have an interest rate of 16% to 20%. This is where you’re money in going.- You can negotiate with your creditors. If you have had a credit card for a couple of years call the company and ask for a lower rate. They may give it to you just for being a loyal customer. You may be able to bring down you’re interest rate to 11% or 12%. Sometimes it’s just as easy as asking. If the company is unwilling to lower you’re interest rate today ask them at what point they will lower it. You maybe able to work that goal into you’re plan.
Once you know what the interest rate is and how much you owe for each of your cards, and you have gotten the best rate you can, the Next step to consider is combining your debts. You should try to place your debt onto the cards with the lowest interest rates. This can save you a lot of money. All you have to do is call the credit card company and ask how to transfer funds. Be carefully of offers to transfer balances at low rates to new cards. In most cases the low rate only lasts for a short period of time and then you back to where you started from.
Always pay more than the minimum.
The credit card companies are not being nice by letting you pay a small minimum payment. The minimum payment is designed to extend your payments for as long as possible so they can make the maximum amount of money from you. If you only pay the minimum payment you maybe paying for those new shoes years after they have worn out.