Ways to Reduce My Credit Card Debt

Stop Spending

If you stop spending on your credit card, you will reduce your debt every month as you make payments on the balance. Even if you are only making the minimum payment, you are still reducing your debt because it is not getting any bigger with new purchases. Take your cards out of your wallet so you are not tempted to use them. Instead, use cash or debit for purchases. Budget carefully so you can afford all of your essentials, such as your mortgage or rent, utilities, groceries, car payment, gas and credit card bills.

If you are only making the minimum payment on your credit card debt, you could find yourself still paying it off in 10 years. Chip away at debt more quickly by paying more than the minimum each month on the card with the highest interest rate. Save your money during the month by eating out less frequently, avoiding unnecessary purchases and earning more if possible. When the credit card bill is due, make an extra large payment to take a big chunk out of your debt. If you have extra money in savings beyond your emergency fund, use some of that to reduce your debt so you do not have to pay interest on it.

Lowering the interest rate on your debt can help you pay it off more quickly because a lower portion of each payment goes toward interest and more money goes toward reducing the amount you owe. One simple step is to call your credit card company and ask for an interest rate reduction. You can also threaten to transfer your balance to a credit card with a lower interest rate. Some credit cards offer low interest rates or zero percent interest rates on balance transfers, although you might have to pay a fee to transfer the balance.

If your goal is to reduce the amount you owe on your credit cards, but not necessarily the amount you owe overall, debt consolidation provides a quick solution. When you consolidate debt with an outside source such as a new lender, you obtain a loan for the amount of the credit card balance and use the loan to pay the credit card. However, you still owe the same amount to the new source. Some common ways to consolidate debt are with a home equity loan or line of credit, personal loan or a loan from a retirement account or whole life insurance plan.