Almost everyone is dealing with credit card debt. In fact, more than 45% of Americans have a credit card balance. If you do not want to live with these debts your whole life, then you must take action right now.

According to specialists, the average amount of debt per household is 15,956 dollars (wisebread.com). We live uncertain economic times. It is important for us to put ourselves out of risk. Reducing or even freeing yourself from your credit card debt does that. If you’re perseverant enough, you can even go from debt to savings.

Financial advisors often suggest that the average person should not pay more than 10% of net take-home pay on credit card and other consumer debt (Investopedia.com). Let’s take a look at some useful tips for reducing credit card debt.

Target The Highest Interest Rate Card First

Take the extra cash you have and pay off your biggest interest rate card. This does not mean you should not pay for the other card you have. You will pay the total amount of money owed to that top priority while also covering the minimum necessary on your other cards.

This is a fast way to end your credit debt and reduce your monthly interest fees. Doing so, you will feel a great sense of accomplishment and relief. The main goal is to have just one card to pay for.

Stop Using Your Credit Cards

You can use cash instead. This way you will have more control over how much you are spending. Research has shown that people are willing to pay more if they use credit cards than they do when they pay off with cash.

Ask Your Creditors for Lower Interest Rates

Go to your creditors or simply contact them by phone and make sure they will lower your interest rates. This is simpler to obtain especially when you are a loyal long-term customer who makes payments on time. Even if, at first, the decrease seems small, during a year time it might mean a lot (hundreds of dollars saved annually).

Get Organized

Create and keep a file of your credit cards. It must contain details like which credit card you have, what creditors they’re from, their specific interest rates. You can also calculate the total amount of debt you owe. First, you must know these details in order for you to be able to pay off your debts. Finally, make a sustainable plan on how you will pay the debt off.

Create a Budget

create a budget

Cut off the unnecessary costs. You will have to make some sacrifices, but if it helps you get rid of your debts, then it is all worth it. Divide and plan your monthly budget so that you can cover all your urgent expenses. For example, try to eat at home and dine out less, close the TV and other electronics when you are not using them, do what you need to do to reduce useless costs.

Make Two Minimum Payments a Month

Every time you pay even a small amount of money for your debt, the balance reduces. This will help you pay off your debts much faster. There are two types of strategies when it comes to credit card debt: you can either pay off the card with the biggest interest rate while also paying the minimum amount for the others, or vice versa (paying off the card with the smallest interest rate while you give the minimum amount for the other cards). The first strategy is much more efficient and it solves your problems faster.

Do Not Close the Credit Card

At first, closing your card may seem like a good idea. It is not! Your credit score is calculated based on your credit utilization ratio (the number of credit you are using compared to the total amount of credit in your name). Closing the card only makes it worse, increasing your debt utilization ratio.

Keep Your Motivation Up

Set specific clear goals to keep you focused. Think of what you can make by getting rid of this debt. Maybe you will be able to go to that dream island you always wanted to go. Or, maybe, you will finally buy that house you want to live in. Write down these goals and always carry them around with you, so that you never forget them. Also, keep track of your progress. This gives you more motivation. Celebrate every time you meet a new milestone.

Bottom line, try to be as organized as you can, cut useless costs, create a budget and stick to it, and always be motivated. Don’t lose your hope. This is just a temporary situation and things can always change for the better.

Image source: 1, 2.