In tough economic times families and individuals my turn to credit cards to supplement lost or reduced income. When their finances improve those in debt may wonder, what is the quickest way to reduce credit card debt? Furthermore, how can high interest rates be lowered?
Those who own property or a home may be able to take out a home equity loan to pay off credit card debt. However, those who are not in that position can benefit from these easy tips.
Contacting Creditors to Reduce Interest Rates
Many credit card companies will work with those in debt to find a solution. Simply place a call to the creditor. Depending on the situation, either state genuine interest in paying off the card or a current difficultly in making the minimum payments. Ask if the interest rates may be reduced temporarily or permanently to enable the debt to be paid off more easily.
The card holder can expect one of several outcomes. If the card has been open for less than a year or was once involved in a debt management program, the credit card company may refuse to make any changes to the interest rate. In this case another option is to transfer the debt to a new lower interest card.
However, if the relationship has been long and good, the card holder can expect some help. Some companies may reduce the interest rates, no questions asked. Others will put the the account into a payment plan for 6-12 months. This lowers the interest rates and puts in place a set low payment, without harming the card holder’s credit. However, the card may be closed permanently or temporarily.
Making Smarter Payments to Reduce Credit Card Debt
One new addition to every credit card statement is a small credit counseling chart. This chart is a wake up call to card holders regarding the minimum payments required on their statements. Just making the minimum payments every month will not result in a quick reduction of debt.
Here is one example of a credit card statement. The card holder owes $850 and the interest rate is 18.87%. By paying the minimum payment of $24 dollars per month it will take eight years to pay off the debt. However, by paying $31 per month, just $9 more, the debt will be payed off in just three years. This will save the card holder $438 in interest.
Paying off credit card debt without loans or a private debt management program may be easier than the card holder thinks. Creditors will often lower interest rates with just a phone call from the card holder. By paying a little more than the minimum payment each month, debt will also be decreased much sooner.