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8 Steps to Credit Card Debt Reduction

The end-of-year holiday season is always tough on plastic. And no, we’re not talking about those flimsy bags you piled groceries into as you prepared for yet another feast. Instead, we’re talking about the hard plastic that’s likely cowering inside your wallet right now, fearful that you’ll whip it out and make another purchase.

Indeed, your plastic credit cards are likely battered and bruised following the frenzy of the holidays. So if you’re like many Americans who’ve vowed to reduce your credit card debt this year, read on for tips on how to start the year off right.

America: A Land of Debt

Consumers carry a lot of debt because credit cards are easy to use. And when you only have to make monthly payments in amounts at mere fractions of your total balance, it’s easy to rationalize any purchase. But those unpaid dollars add up and are fattened by interest charges. The longer you take to repay a debt, the higher the total repayment amount.

While you probably don’t think about this scenario each time you’re mesmerized by some flashy new product, it’s time to stop the madness and commit to get out of credit card debt once and for all. Here are some ways to jump-start your credit card debt reduction plan:

Step #1: Focus on becoming and staying debt-free.

You need to eat, breathe, and sleep ways to  reduce your credit card debt. Write reminder notes to yourself that say “STOP USING CREDIT CARDS!” and place them everywhere – in your wallet, on your refrigerator and bathroom mirrors and even on your computer screen. These daily reminders will eventually sink in. Also, resist participating in activities where you might be tempted to use credit. Instead of dining out, invite friends over for a potluck. Or, instead of seeing the latest movie at the theater, borrow a free one from your local library. Inexpensive forms of entertainment and fun abound once you know where to look.

Step #2: Get rid of those credit cards – well, sort of.

Your goal is to stop using plastic all together, but if you can’t quit cold-turkey, then use only a debit card. This way, you can only spend the available balance in the account linked to that card. Next, physically remove all other cards from your wallet so you’re not tempted to use them. But don’t cut them up or shred them; when used appropriately, credit cards can help you reestablish a positive credit history. But we’re getting ahead of ourselves; let’s get back to tackling your existing debt.

Step #3: Use cash and shop with a list.

Now that you’ve lightened your wallet, use the cash you have rather than credit to pay for necessary expenses. Also, avoid impulse buys by always shopping with a list. When grocery shopping, for example, plan your meals so that you buy only the ingredients you need. The savings will add up quickly!

Step #4: Learn free ways to reduce credit card debt.

Pick up the phone and call your credit card provider. Depending on your situation and the creditors policy, you might be able to negotiate reduced interest rates on credit card debt or request a late fee waiver. [You might need the help of a debt relief provider to achieve these objectives. See Step #7 for details.]

Also, look online for free credit card debt reduction calculators. For example, CareOne’s online calculators can estimate how long it will take you to pay off a credit card balance based on information you provide (assuming you make only minimum monthly payments without incurring new charges). Your monthly credit card statements feature these details, as well, thanks to the Credit CARD Act of 2009.

Step #5: Increase your monthly payment amount.
Once you understand how to calculate your pay-off terms, consider boosting your payment amount. If you only
pay the minimum amount due each month, increasing your payment by as little as $10 is one of the best ways to reduce credit card debt. It may be challenging to find that extra $10 each month, but one less store-bought coffee here or one less happy-hour cocktail there adds up and helps you reduce credit card debt quickly.

Step #6: Do not apply for any more credit cards.

It may be tempting to accept a new credit card offer, but these deals often come with attractive interest rates for a short time period before soaring upwards and perhaps placing you in a more precarious debt situation. When your goal is to reduce credit card debt, it doesn’t make sense to add more plastic to your collection.

Step #7: Accept help.

Developing a credit card debt reduction plan isn’t something you have to do alone. Consider partnering with a reputable debt relief company that can assist in negotiating with your creditors and consolidate your debts into one affordable monthly payment. A good partner will evaluate your specific situation and advise you every step of the way. Click here for tips on finding a reputable, ethical partner. Also, visit the CareOne Help Center or contact us via phone or email to learn about our debt relief plans.

Step #8: Be patient.

Getting out of credit card debt takes hard work, a long-term commitment, and a realistic plan. You’ll need to work hard, adhere to a timely payment schedule, and forgo extra shopping and entertainment.

What is the Best Way to Reduce Credit Card Debt?

Bottom-line: You CAN beat the post-holiday financial blues and reduce your credit card debt, but understand that deciding what plan or solution to use is a personal decision and should suit your individual needs. Now is a great time to begin creating a new you – one who is committing to reducing credit card debt. Take your first step today! 

If you liked this you may also like:

  • Pros and Cons of a Credit Card Consolidation Loan

    If you’re one of the millions of Americans with overwhelming credit card debt, you may have looked into a credit card consolidation loan to tackle your debt. And while a consolidation loan for credit cards can be a good option when you have a lot of bills to pay off, there are plenty of alternatives to consider. Each has its own pros and cons.

  • Are There Debt Consolidation Loans for Bad Credit Profiles?

    A debt consolidation loan can be a great tool for people with bad credit to help them get their finances back on track. By combining your existing bills into one new, monthly payment, you’ll be able to pay off most of your debts and work on becoming debt-free for the long term. But if you’re one of the many consumers with bad credit, you may be wondering whether you even qualify for a consolidation loan.

  • Who Offers the Best Debt Consolidation Loans for People with Bad Credit?

    If you’re struggling with debt – as many consumers are – you may be looking for a way to pay off your bills and get back on track financially. Debt consolidation loans for bad credit profiles are one way to get out of debt, but you may be wondering where to look if you’ve been turned down by your bank or credit union. Before you go down the wrong road, take some time to realize there are choices for you, regardless of your credit history and financial situation

  • Get Debt Help

    Because of the economy, millions of people across the country are looking for debt help. If you’re one of those millions, you may be facing overdue loans, calls from debt collectors, and increasing late fees and interest rates. In many cases, the best way to get rid of these debt problems is to work with professional debt-relief provider.

  • How to Pay Off Bills Fast

    Nobody enjoys paying bills, but if every mail delivery brings more demands for money, the bills are mounting up in a pile, and you’re juggling the debt you already owe with new expenses arriving every day, it’s time to take control and reassess your approach to paying bills.

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