Expert Tips for Cutting Credit Card Debt


The process of cutting debt can not only make you money but also improve your credit score.

Credit cards are an incredible benefit. If you’re not cautious they can also be an easy way to fall into financial difficulties and then end up with huge debt and poor credit.

The most effective way to manage the credit card issue is to use them wisely and pay them promptly. For those who are suffering, the following are a few easy steps to cutting down on the amount of credit card debt.


  • Credit card debt can be costly and the accumulation of too much could affect your credit score.
  • Credit cards are characterized by high interest rates, which means that any balance remaining at the end of the month could increase quickly.
  • To lessen the amount of credit card debt you owe Try to pay off the balance as high as you can before the end of each month.
  • If you own multiple credit cards, make sure you get rid of one that has the highest interest rate first.
  • At a minimum, pay the minimum amount every month. In the event of a missed payment, it can harm your credit score.

Downsides of Credit Card Debt

There are many positive reasons to have lower credit card debt or perhaps none whatsoever. One of them is:


Interest on credit cards is more expensive than other types of debt. In reality, the interest on credit cards is around two-to-three times the rate of interest for mortgages or home equity loans. This can make a huge dent of your budget for the month.

Financial advisors generally suggest that the average consumer shouldn’t spend less than 10% of his take-home earnings on credit cards and other consumer loans (not not including mortgages) According to Howard S. Dvorkin, an accountant certified by the Institute of Public Accountancy and co-founder of Consolidated Credit Counseling Services. In fact, spending more than this could hinder your ability to make other money to meet the needs.


Lewis J. Altfest, an accredited financial planner from New York whose clients tend to be professionals who have large incomes, states that credit card debt can be the possibility of risk. It may also be a early indication of trouble to come. “Too frequently, [financial planners] see abusive use of credit leading to financial difficulties,” Altfest writes. “Sometimes people just get in too deep.”


In contrast to other types of debt, interest on credit cards isn’t tax-deductible. In contrast your interest for the mortgage on your home or student loan usually will result in a tax deduction.

Lower Credit Scores

One of the factors bureaus employ to calculate their credit rating is the credit utilization rate. This is the amount you owe as a percentage of credit you have available. In the example above, if credit limits on your cards amount to $15,000 and you owe $5,000 you have a credit utilization rate of 33 percent. In general that a ratio of credit utilization that is greater 30 percent is considered to be a negative for credit scoring.

How to Attack Credit Card Debt

If you’re looking to lower the amount of credit card debt you have Here are some options you could follow.

Pay More Than the Minimum

Let’s suppose you owe $5,000 to the credit card you have and pay 15 percent interest. The credit card company may permit an affordable minimum payment like the equivalent of 2% of the balance, or $100 per month. Making the minimum amount of payment could cause you to be in debt for years and hundreds of dollars of added interest.

If you don’t make any additional purchases using the card, and that you pay the one-time fee of $100 each month How long will it be to pay off the loan of $5,000? It’s 79 month, that’s more than six and one-half years. In addition, you will be paying around $2,000 in fees. This is a significant amount to cover the cost of taking out a loan of $5,000.

Pay Off the Highest Interest Rate First

“Let’s say you have four credit card debts,” said Charles Hughes, a certified financial planner from Bayshore, N.Y. “Instead of making four equal payments on all of the cards, consider making the biggest payment on the card with the highest interest rate.” Once you’ve paid that credit card off, move to the card with the next rate.

This method is known as the debt avalanche and it’s the most profitable method. It is in contrast to another strategy for paying off debt known as the debt snowball where you pay off your smallest debt first (paying only a small amount on the rest). Then , you can use the extra cash to gradually pay off the remainder of your debts starting from the smaller to the largest. This provides the psychological advantage of reducing the amount of debts that you have to pay through several smaller wins until the largest one is the last left.

Avoid New Debts

Set your credit cards aside for a while , and attempt to pay for your daily purchases with cash. It could also be a good time to perform a cash-flow analysis to find out the places your money is being spent, Hughes notes. You’ll probably find out about unneeded expenses that you could cut down on and you will save even more.

Transfer Your Balances

It’s possible transfer your balances from high-interest cards to less-interest ones. They typically offer the 0% interest rate for six to twelve months. While it’s tempting however, there are a few limitations. In the first place, transfer deals typically demand an upfront fee of 3 to five percent of the amount being transferred or, alternatively, an all-inclusive balance transfer cost. However, it might be worthwhile, particularly when you’re using one of the top balance transfer cards that are available.

Consolidate Your Debts

You could also consider taking the opportunity to take out a personal line of credit or loan to consolidate your credit card debts (and any other loans) at a lower rate. If you do this, you might be able to convert your the debt you have on your credit card that is paying more than 15% in interest into loans with an annual percentage increase between 4to 8 percent.

Be sure to keep the money you save on interest , rather than putting it into increasing the amount of debt you have, and make certain to evaluate various personal loans to determine which one is the most suitable that is suitable for your needs. You might also wish to partner with an debt settlement or relief company to assist you in reducing the amount of debt you have.

What Is the Best Way to Reduce Your Credit Card Debt?

The first step in reducing your credit card balance is to recognize and cut out unnecessary expenditures, like entertainment or luxury items. Then, it’s essential to get rid of the maximum amount of credit card debt as you can each month. The most efficient method is to settle those with the highest interest first and then pay the minimum amount on all other cards. The larger debts can be combined or transferred to the lowest-interest card, however this could cause additional charges.

Where Can I Find Expert Tips for Paying Off Credit Card Debt When You’re Poor?

Investopedia offers numerous free articles that offer tips for financial education, getting out of debt and negotiating the debt settlement. For more serious situations you can also talk to an expert from a non-profit credit counseling agency to help negotiate strategies for debt repayment.

How Can I Reduce Credit Card Debt Fast?

In the case of extreme financial debts, it could be possible to lower the amount of debt by utilizing the debt settlement company. These are firms that deal with credit firms on behalf of you, generally at a cost of a large amount. The most serious cases of insolvent debt can be resolved through bankruptcy.

How Should I Negotiate With Credit Card Companies to Reduce Debt?

The most efficient method to reach the credit company is to call their main telephone number and seeking an agreement on settling your debt. Certain credit card companies will be willing to forgive a part of the debt, if you pay the balance. This could hurt your credit score, however should a borrower be in really dire straits the credit card company might be better off settling part of the debt instead of suing debtors for whole amount.


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