Get on track to reduce credit card debt with these tips.
Looking to get personal finances on track with less credit card debt? We have you covered. Paying off debt is a huge victory, and so is each step you take to get started. By reducing what you owe creditors, you’ll likely have more peace of mind and save money on interest. There are a few things you can do to help ease credit card debt and make it more manageable.
If a high interest rate on your credit card makes repayment hard, keep in mind that you can request a lower rate from your lender. Credit card interest rates aren’t always set in stone. You may get a lower rate just by asking—many succeed this way.
Maybe your financial situation has improved since you opened the card but your interest rate hasn’t dropped. That gives you a good case for a reduced rate. A credit history with regular use of the card and on-time monthly payments may also work in your favor.
Before you make the call, gather details that support your request. If your lender agrees to a lower rate, ask for confirmation in writing and the date you should expect to receive it.
By lowering the interest rate on your credit card, you’ll pay less in interest each month. Then, you may be able to put more toward your balance.
If high interest rates are in the way, transfer your balance to a card with a lower rate at another financial institution. A balance transfer can also help with debt management by allowing you to merge debts from several cards onto one card with a single due date. You can simplify your payments and lower your interest rate.
Balance transfer offers typically come with a low, introductory interest rate. In some cases, it's 0%, but the rate increases after a specified amount of time. You can pay back your debt faster if you make more than minimum payments and ramp up repayments before the introductory rate ends.
Keep in mind that when your introductory rate expires, it may be tempting to seek out another balance transfer to avoid paying interest even longer. Be aware that if you keep moving your balance to low-interest credit cards but maintain a high balance, you may hurt your credit score. If you’re transferring to consolidate debt, consider ensuring the combined balance doesn’t exceed 30 percent of the available credit limit on your new card. A high credit utilization ratio may bring down your credit score.
When facing credit card debt, canceling your card may seem like a good idea to stop the cycle. On one hand, this will allow you to make payments without any new charges. On the other, it could bring down your credit score in a few ways. Canceling your credit card could have a negative effect on your credit score. Why? Because your score may be impacted by these factors.
Calling on a professional is a great way to get advice specific to your financial situation. You can work with a credit counselor—often free through a nonprofit agency or a financial institution like Navy Federal Credit Union. The pro will review your bills and budget to help you find the best debt-relief options for you.
Credit counseling can provide a clear path to debt management. It can show the steps you need to take to become debt-free. And, credit counselors can help you change your spending habits and teach you money management skills.
It’s never too late to start managing your debt and gain financial strength. Having a debt management plan can help you reduce credit card interest rates, consolidate debt and pay off debt faster. For more tips and resources on managing your credit score, visit our Mission: Credit Confidence® Dashboard. Take control of your finances and gain confidence in your spending habits by starting your debt management journey today.