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The first step to alleviating credit card debt is to stop using
your credit cards. Take them out of your purse and wallet and
leave them home in a drawer or safe place. Develop a budget
based on your income and stick to it. Cards should only be used
in a real emergency. Also, always make more than the minimum
payment on your card. The minimum payment usually only covers
the interest accrued that month so it may be that none of the
payment is actually going toward your principal.
If at all possible, transfer your balance to a lower interest
rate card. Many card companies now offer low or even zero
percent interest on transferred balances for a specific period
of time. Before you do this, however, make sure you know what
the interest rate will go up to after the grace period is over. |
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If you have equity in your home, it is possible you could take
out a home equity loan to consolidate your credit card debt into
one monthly payment at a considerably lower interest rate. Only
borrow the least amount of money you can to clear the card and
pay attention to the closing costs. Think carefully before you
do this though, since your home is the collateral and you could
lose it if you default.
You could contact a free credit-counseling firm. They will
negotiate lower interest rates and length of payments. They deal
with the companies, but you still have to make your payments on
time.
How To Use Credit Cards Wisely
Credit cards do make life a little easier as long as you use
them responsibly. Here are some guidelines that should help you
use these cards wisely.
A credit card is just like any other loan. It needs to be paid
back. Don't overspend.
Pay attention to the balance on your card. Always know just what
it is and make sure to stop using your card once it exceeds the
amount that you can afford to pay in full at any given time.
Keep your receipts from every transaction and balance them with
your monthly statement. This will help alleviate any charge
errors.
Pay your monthly bill on time. Even if it is just the minimum
amount, it is still better than paying late. Not only will the
charge card companies impost an interest penalty, your credit
score could suffer also.
Don't take your cards with you when you go shopping. If you are
going somewhere where you know you will have a hard time
controlling your spending, don't take your card with you. Only
take cash. It will keep your spending in check.
The moral of this story is obvious, use your cards wisely.
Otherwise you will find yourself in a hole that could take
forever to dig yourself out of.
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