Credit Card Debt Reduction - 3 Tips To Lowering Credit Card

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Credit Card Debt Reduction - 3 Tips To Lowering Credit Card Powered By Docstoc
					by: Carrie Reeder

Credit card debt can be reduced through lower rates or negotiating for reduced balances. With
reduced interest, you can pay off the principal quicker with the same monthly payment. The
other approach is debt settlement, which eliminates part of your debt at the cost of your credit
score.

1. Transfer Balances

Credit card companies are always offering introductory deals, such as 0% on transfers. Usually
such offers last for several months, giving you the chance to make sizeable payments on your
principal.

If you have several credit cards, choose to transfer the account with the smallest amount. Pay off
that account, then take that cards monthly payment and apply it to your next lowest balance.
Soon you will be creating a snowball affect, swiftly lowering yo ur debt. Make sure to close paid
off accounts to raise your credit score and keep from adding to your debt.

2. Negotiate Lower Rates

Credit card companies are also willing to lower rates. You can try to do this on your own, but
you will have more success with a debt management company. For a monthly fee, they will
lower rates with credit card companies and handle your monthly payments.

Debt management plans can affect your credit temporarily if your creditors report delayed or
reduced payments. This might prevent you from opening new accounts for a year or more.
However, with such plans you can be out of short term debt in less than five years with a much
better credit score.

3. Settle For Reduction In Debt

Debt negotiation is the most drastic step to lower your credit card debt since it has long term
affects on your credit. A debt negotiation company can settle some of your debt with creditors.
Lenders will then report the reduced amount to the credit reporting agencies, which will keep it
on your record for seven years. Debt negotiation is similar to bankruptcy and can prevent you
from qualifying for conventional credit for a couple of years.

Reducing your credit card debt will have long term benefits for you. Less credit means better
rates when you do want to apply for financing, especially with a home or car purchase. No
matter which option you choose, research companies carefully and compare their services and
fees.

This article was posted on January 13, 2006

				
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