Saturday, 9:00 am, January 2, 2016. The credit card bills arrive and, you can’t afford to purchase a ladder long enough to climb out of the hole you created from holiday gift shopping and celebrations. What now?
The urge to over spend using credit cards already at the limit edge and acquiring new credit for gifts, big celebrations or a new get-up is just bad and stressful.
Challenge yourself today for a debt-free New Year. Buckle down and create an action plan to get out of debt and enter 2016 on target!
Something to remember is, your payment history is the first most important factor while your credit score is second. Experts recommend keeping your credit card balances at no more than 30% of your credit limits of course, 10% or less is better.
So, stop hurting your credit and pushing off bigger goals like buying a house; here’s a few tips to freedom.
- Phone calls work: If you credit score is better now than when you applied for your cards, call the creditor and ask if you qualify for a low interest rate. If the first representative doesn’t understand, politely hang up and call back. It’s worth the effort.
- Smallest Balance First: Make a list of your debts noting the lowest balances first. Pay as much as you can and pay the small balances first. This process will keep you motivated as you cross off and pay-off. Although this process involves using extra cash the reward is priceless.
- The Big Kahuna: If you have a big bonus check, tax refund or inheritance in the works, use it and pay down a huge block of debt. You many feel the squeeze now but, you’ll sleep better tonight.
- Interest Rate Strategy: Paying off debts from the largest interest rate to the smallest interest rate may not please some creditors. As you pay whatever you can on the debt with the highest interest rate, you make the minimum payments on other debts. Then, when you’ve finished paying off one debt, you add the money from that payment to the debt with the next highest interest rate, and so on.
- Balance Transfer Credit Card? The strategy is to move a big balance from one credit card with a high interest rate to one with a lower interest rate, or zero introductory rate. NO… this doesn’t mean generate more debt! You will end up spending less on interest charges, which can help free up more money to put toward your debts. Warning! … Make sure you continue to make on-time payments and perhaps there’s a small balance transfer fee. Most importantly, read the terms on your credit cards carefully before you apply.