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Debt Management Strategies

To save money when paying off credit cards, follow these suggestions:

• You can save as much as a thousand dollars or more each year in lower credit card interest charges by paying off your entire bill each month.


• If you are unable to pay off a large balance, pay as much as you can and switch to a credit card with a low annual percentage rate (APR).


• You can reduce credit card fees, which may add up to more than $100 a year, by getting rid of all but one or two cards, and by avoiding late payment and over-the-credit limit fees.


• If you have outstanding balances on more than one credit card, pay off the card with the highest rate first. Make all monthly payments on time, but make your largest payment to the card with the highest interest rate. This will help you to pay off your debt more quickly.


• Whenever possible, pay your full balance each month to avoid paying finance charges.


• Mail payments as soon as you can to reduce the interest you owe and to be sure that you won't pay a late fee.


• Ask the credit card company if you can get a lower interest rate on your existing card for being a good customer.


• Always try to pay more than your "minimum payment" to get out of debt faster.


• Read the mail you get from credit card companies to spot changes in policies.


• Save receipts and compare them with your credit card statement.


• If you believe there is an error in your statement, contact the credit card company immediately.


• If you have been sending a certain amount of money every month to pay off a credit card, don't stop when you get that card paid off. Use that same amount for another debt, until you are completely debt-free.

The longer you take to pay off your credit card balance, the more your credit purchases will cost you. If you make only the minimum payments due every month, you may feel as though you're standing in place or even losing ground. Your balance won't go down much, even if you're not adding any new charges. This is because when you pay just a little toward your credit card debt, most of the payment you make goes toward interest.

Monthly minimum payments have been dropping, so now most card issuers only ask for 2-3% of the outstanding balance. This helps customers who are in a pinch-for a month or two, you can make a very small payment and still be a customer in good standing. However, if you make it a habit to only pay the minimum due, interest piles on and you will pay a lot more over time.

DO THE MATH:
Let's say you have a balance of $l, 000 on your credit card, and you do not add any new charges. If you pay only 3% each month, it will take you 10 years to pay off the balance. And you will pay almost $800 in finance charges. If your minimum payment is only 2 percent of the outstanding balance, you will be paying off this debt for almost 20 years, and will pay interest charges of $1,931 !!

- Correct Your Credit Report

Making a Budget -