Today is the final day of expense evaluation before we begin to tie things up (the
month is nearing an end, after all), so today we’ll tackle what is perhaps the
biggest financial rough patch in the United States: credit cards. As anyone who
has ever faced a big pile of credit card debt can tell you, credit cards are nefarious
little devils that can sneak up on you and destroy all of your financial planning if
you’re not careful. Thus, here are some tips for managing that month-to-month
credit card debt; spend some time today implementing them to reduce your
monthly credit card spending.
Look into moving your balance to another card. If your credit is strong,
you can easily obtain a 0% APR on balance transfers for as long as 18 months.
Doing this can transform high interest debt into no interest debt, meaning that
each payment will go straight towards eliminating the balance. Be sure, though,
that you have eliminated a lot of the balance during this period, because it will be
painful when the interest payments come back.
Ask for a rate reduction. Another potential avenue for reducing the monthly
interest on a card is to call the number on the back of the card, get to a live
operator, and ask to speak to a supervisor. At that point, tell them you’re tempted
to take a balance transfer offer in order to consolidate your debt and request that
they reduce your interest rate. Quite often, they’ll be happy to oblige because
earning less interest on a credit card is better than earning nothing at all.
Look for lower interest methods to consolidate your credit card debt.
You may have available to you a home equity line of credit that is at a much lower
interest rate than your credit cards, so it might be worthwhile to pay off the cards
with the HELOC. Another possibility is discussing a personal loan with your local
bank; you might be able to consolidate a lot of the debt into a relatively low
interest loan. However, these tactics don’t mean you have a clean bill to spend
again! Put the credit cards up for a while and learn how to live on the money you
have.
Stop using credit cards for day to day expenses until you can
eliminate the debt. Until I got my credit cards under control, I moved to using
checks and cash wherever possible, supplemented by a debit card. I treated the
credit card bills as a loan that needed to be paid off, not as a tool to buy more
stuff I couldn’t afford. I didn’t cut them up, though; I just put them in a place that
was hard to access. Why? Canceling a bunch of credit cards all at once can be
severely detrimental to your credit health.
Tomorrow, we’ll begin to finish out the month by re-evaluating where we’ve been
and looking at ways to keep the momentum going.
