Credit Card Debt

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Are you snowballing or performing plastic surgery on your credit card debt?

There has been an explosion in the number of credit cards for only one reason: the credit card companies make a ton of money charging high interest! They also know that people spend about one-third more when they use credit cards rather than cash. The average household with an unpaid balance has about $10,000 in credit card debt

Here are some suggestions to help you pay off your plastic.

Snowball the plastic

Snowball your way out of debt! In addition to making the minimum payments on all your credit cards, focus on paying off the smallest balance card first. You’ll be encouraged to see its balance go down and finally to be completely paid.

Then, after the first credit card is paid off, apply its payment toward the next smallest one. After the second card is paid off, apply what you were paying on the first and second toward the third smallest. That’s the snowball in action!

So…where do you start? List your debts in order with the smallest remaining balance first. Every time you pay off one don’t forget to celebrate!

Perform plastic surgery

We started with nine credit cards, and today we carry two that we pay in full each month. Fewer credit cards makes life simplier! So, cut up the cards you do not really need. If you can keep the cards you’ve had the longest it will help your credit score.

Also, opt out of receiving telemarketing calls and credit card offers by mail.

Lower the interest rate!

There is a lot of competition among credit card companies for your business. If your company is charging a high interest rate, phone and ask them to drop it. You may have to call several times, but 75 percent of the time, they will lower the rate.

Another alternative is to transfer the balance to a card that charges less interest. Before switching to a lower-rate card, confirm that the new card has no transfer fee, no annual fee, and that the interest rate on transferred balances is not higher than the advertised rate. But remember, if you miss a payment or make a payment late, your interest rate will automatically skyrocket in most cases.

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