Credit cards can be a great way to purchase goods and services as it allows you to defer the payment until the credit card bill is due. Many credit card companies entice consumers with interest free periods, low introductory rates, bonus points and other rewards. However once these periods are finished these credit cards can easily turn into 30% interest rates which can double and even triple the minimum monthly payments initially required, causing you financial hardship and stress especially if you have multiple credit cards. So how do you reduce your credit card debt?

1. Obtain a Debt Consolidation Loan

Approach your bank or other financial institutions and apply for a debt consolidation loan. It is strongly recommended if you do this, completely close of all the credit cards that you have consolidated into the loan. Shop around for the best interest rate and terms of the loan contract.

2. Balance transfer into a Low Rate Credit Card

This is a very popular option for many consumers who have only a few credit cards with low end balances. This involves transferring the balances of multiple credit cards into on a low rate credit card. This low rate usually applies for a short period of time but gives the consumer the opportunity to pay off as much as possible during this time. It is strongly recommended you pay more than the minimum and cancel the credit cards once the balance transfer has been complete.

3. Pay above the Minimum Monthly Payments (MMP)

Most credit card companies charge between 2% – 3% of the outstanding balances on the credit card. For example, if you owe $10,000.00 then the interest only payment on the credit card would be approximately $200.00 (2% of balance). To reduce the balance on the credit card, payments will have to pay in excess of $200.00. It is strongly recommended that you consult your credit card company first to find out the rate you credit card is charged.

4. Negotiate better rate terms

Most credit card companies and financial institutions are happy to look at lowering the interest on existing credit cards if you are genuinely struggling the make the minimum payments. This process usually means that you have to complete a statement of financial position to the bank or the financial institution to outline your current circumstances. It is strongly recommended at this point that you completely stop using the credit cards at this stage.

5. Consult a Debt Management professional for further advise

There are many companies that are happy provide free advice on how to deal with credit card debts. They will usually sit down with and complete a financial assessment and provide you with tips and hints on how to reduce your credit card debts.

If you do need further assistance or help with your current Debt Situation, give Debt Negotiators a call on 1300 351 008 for a free consultation.