A financial channel I watch, asked millionaires what was the single most important factor to attaining wealth. The majority said not incurring large amounts of debt was the number one reason for their financial success. As with most things in life, it's sensible and simple, yet unique. Millions of Americans set a goal to pay off their credit card debt, yet few ever do. Is this one of your goal? With a lot of determination and a good plan, you can achieve the goal of taking control of your debt and credit. Here's how:
Get rid of the cards-
Well, don't cut all of your cards tomorrow. Credit cards offer convenience and are helpful in emergency situations for sure. Moreover, if you close accounts too quickly, it can affect your credit score. But you can certainly pay them down, not carry them and use cash or debit. Try to avoid the store credit cards (which have the worst rates), and using cards for disposable purchases such as dining out and travel.
Negotiate, Negotiate, Negotiate-
Simply call up your credit card issuers and ask for a better rate. Tell them you plan to transfer to another card unless your rate is lowered. Tell them you have other offers in the mail. Inform them that your rate is just too high for a loyal customer to pay. Tell them anything reasonable, as you have nothing to lose. Credit card rates are high, interest rates on in other instances at at historic lows (Autos and Home) and quite frankly, credit card companies have a bad perception with consumers and the government, so they might budge.
Reduce that debt-
It sounds elementary, but make a list of the cards you have. And pay as much as you can on that highest interest rates, and pay the minimum on the other cards. The additional payment on the high rate card will pay off the principal faster.
Once you get that success under your belt, use the same strategy on the others. If you have to, may off that low balance early, so you get the taste of success. Remember to keep that low interest card open for emergencies.
Debt reduction is easier said than done. And as they say, making more money never hurts the cause. But if you remember that paying off debt is a marathon, whether you run or walk, you will eventually make it.
A couple of reference articles:
13 things millionaires don't do
http://debt-free-mom.com/2007/11/20/13-things-millionaires-do-that-you-dont-do/
Money debt reduction planner:
http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp
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