Posts Tagged lowering debt
Ways to Reduce Credit Card Debts
Posted by sam in Credit Card Debt on June 4th, 2009
Ways to Reduce Credit Card Debts – Result Oriented
Many are going suicidal these days under the burden of worries caused by high credit card debts and their interest rates going higher and higher each month. Many even consider the credit card companies “sharks” wanting to devour all their money without them even realizing the pain they are going through. Despite the common knowledge that credit card debts are disastrous, there are still ways to reduce them considerably by just using proper planning and smart decisions.
So what is the best way to reduce your credit card debts? Well any expert on the idea would say, “Paying off your credit card bills on time.” However, this is not the best advice anyone could give you, because you would be like, “How am I suppose to pay them off in time, when they are even higher then my paycheck?” The best thing you could do is to seek professional counseling in this regard. The counseling service (which should be free or low cost) will give assistance in how best to address financial problems. These counseling services can help you find programs or planners who would really help you make your payments in such timing which would decrease your drastically high credit interest rates so your debt would decrease.
Well, what you should remember is that there is no easy way to do this. This will be a long and gradual process, because those ill-payments have already made your bills go up high. The reduction of credit card debt can take place by DOLP (dead on last payment) or by paying off the debts with the highest interest rates first. So what should be considered the best? Well most of the programs for reducing your credit card debt on the internet say that it is best to pay off your credit cards with the highest interest rates first, because that would save you more money. For example, if you have a 25% interest rate on a $1,000 debt, it is still 10% higher then a 15% debt on $2,000 if you look at it in terms of paying it off.
If you choose the other method, i.e. DOLP, it helps psychologically and gives you the motivation to pay off your credit card bills as quickly as possible. Also, you can quickly decrease the number of cards you use, because you start paying up the least interest rate and payments first, so you will get rid of more cards which saves you a lot of mind work as to who to pay first and who to not.
So it is you who have to decide that which one is best for you. It really depends on how you are and how you are taking your credit card debts. If you are fully motivated, and can make your payments on time, the highest interest rate strategy will work best for you. If you are discouraged and frustrated with your credit card bills, and want to see immediate results, the DOLP would be your best retreat.
Lower Your Credit Card Debts
Posted by sam in Credit Card Debt on May 24th, 2009
Lower Your Credit Card Debts – BI-Weekly Payments Method
If you are reading this article, I am sure that you are tired of paying huge bills and draining away all of your money to the credit card companies. Maybe I can help you. All you have to do is try a different approach than you are using right now, doing bi-weekly payments.
The great benefit of paying your credit card bills bi-weekly is that when you make half of your month’s payment every fourteen days, you would have made 24 payments in a year instead of the traditional 12, so that means it would help a lot in reducing down your interest rate, and improving your average credit score.
However, before making the effort and hassle of arranging two payments for your monthly bill, write up or call your credit card company to make sure that it is okay with their credit policy to allow you to do that. You must always make sure before taking steps like that.
This helps a lot in getting rid of your credit card debts 2 times as fast as if you would just have paid your monthly minimum. Let me create a scenario for you to better understand this. For example, if you charged $5,000 on a card with a 17 percent interest rate, that makes your monthly payment at least $100. So that just means that you pay $50 every two weeks, you will cut down your interest by $8,149 precisely, and will end up paying the debt in six years and 14 weeks. Now let me tell you the important part of that scenario. If you would just have paid the monthly minimum, you would have ended up paying your debt for about 34 years.
You should keep one thing in mind here though. You should decide, whether this method of lowering your credit card debts is beneficial or not. This mode of payment is only nice for those who have large credits with large interest rates. If you have small credit and small interest rate, the mode of bi-weekly payment won’t do much good, and you would just be overstretching yourself for nothing. Also, you must make sure that you are well organized to opt for this method, as it can prove really disastrous if you are not organized enough. The trickiest part is sticking up with the 14 day schedule. If you don’t want to face the late fees, you would have to make sure that you never miss out on even one payment. What you could do is, setup an electronic transfer with your bank for the money to get automatically transferred to the credit company from your bank account every 14 days.