Credit Cards (major)

Pay off that Credit Card Part II

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Last Wednesday, we covered four basic tips on credit card debt management;

  • Cut the so-called “needed” expenses.
  • Critique your necessary expenses: Trim the fat.
  • Pay more than the monthly amount – if you can.
  • Get a card with a lower interest rate.

With a solid plan, some dedication and support, you can achieve your financial goals. Here are some more tips to help you get through this manageable  (and temporary) hurdle!

 credit card debt management

Talk to your Credit Card company (or companies)

We didn’t discuss the support aspect of this finance-repairing journey too much last week, but this is a step that might save you a good chunk of change.
Your friends and family will support you emotionally throughout the process, but there’s another group that can possibly help you lower your actual debt – your credit card company. If over-limit/late fees are piling up, give them a call and explain your situation. Most companies are willing to lower your interest rate for a time or waive late fee balances.

You can also negotiate your payment due date. Let’s say all your bills come due at the beginning of the month, which is perhaps why you can’t pay more than your monthly payment at the time, or if you’ve even missed a payment.

Other things credit card companies may be willing to do include:

-Accepting a partial payment in lieu of the total amount due
-Waive the annual fee (if there is one)
-Remove a mark from your credit
-Upgrade your account status from “past due” to “current”

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Don’t depend on your credit cards for emergencies – build a rainy day fund.

How many times have you chipped away at your credit card debt, only to be hit by some unforeseen expense and whoooop, up the balance goes again? It’s demoralizing and frustrating. If you have the control to keep the funds in your house, go ahead and do that ( a nice cookie jar will do ). But if you want to gain from your savings, open up a TSFA or even a free savings account will do.

You might as well benefit from your efforts by accumulating a little interest. If you’re not sure if you can put money aside, refer back to our part 1. After analyzing your luxury and necessary expenses, take a fraction of that budget and put it into a savings account and the rest onto your debt.

snowballs

Snowball, snowball, snowball.

If you have more than one credit card, but they all have approximately the same interest rate, go ahead and tackle the lowest debt first.
Why? It will help your morale to remove one debt at a time from the pile.

Here’s an example:

Card #1. $1000
Card #2. $3000

Monthly budget for debt repayment: $300

Pay the minimum on Card #2 until Card #1 is paid off. At this rate, say $250 remains after Card #2’s minimum is paid. It will take 4 months until Card #1 is paid off in full. That’s not so bad! You can then allot your entire monthly repayment budget towards Card #2.

It might seem like a small thing, but trust us, attitude is everything when it comes to debt-repayment. Getting control of your finances, whether it’s a massive overhaul or just little tweaks that can save you hundreds, is liberating and rewarding!

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