Reduce Your Credit Card Debt

If you are one of the many North Americans that has credit card debt, you know how easy it can be to get deeper and deeper in the hole. The most common way to get yourself into trouble with your credit cards is by not paying the full amount each month when the bill arrives.

As time passes by, your debt has increased exponentially. Up and up it goes with no end in sight. You try to dig yourself out by the interest rates are making it impossible. 50% or more of your monthly payment could be interest, So what can you do? Make a phone call.

Yes, give them a call. Tell them that you are trying to be more aggressive in paying off your debt and can they give you a break on your interest rate. Tell them that you have been a good customer, always make your payments and want to remain a loyal customer and can they please give you a break.

Don’t take no for an answer, keep on them. Do not be rude or pushy but be persistent. If you keep at them, they may just lower your interest rate a couple points and if they do, that couple of percentage points can make a huge difference in how quickly you can pay off your debt.

Let’s assume you have $7,500 in credit card debt at an interest rate of 16 per cent. You can afford to pay $250 per month on your bill. At this rate, it will take you 39 months to pay off your debt and you will pay $2142.10 in interest alone!

If you can convince your credit card company to lower your rate by just 4% our numbers change. Now it will take you 3 months less to pay off your debt and your total interest payments go down to just over $1400. Now, increase your payments to $300 a month and the results look even better. Now you will only take 29 months to be free and clear and will pay under $1200 in interest!

The one thing you cannot do is make the minimum payment. This will kill you. If you only make the minimum payment of, let’s say $150 and your interest rate is 16 percent, you are now looking at 300 months to pay off your debt…and total interest of over $12,000.

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