Negotiate Your Credit Card Debt in Five Easy Ways

Credit card debt is one of the top reasons consumers seek debt relief. American consumers have $102 trillion in credit card debt, according to the Federal Reserve Bank. As much we all want to pay our debts on time, hardships like divorce, medical bills and job loss happen. But that doesn’t mean the banks and credit card companies are going to forgive the debt. If you have trouble paying your credit card debt, you will have to reach out to them. Here are five easy ways you can negotiate your credit card debt.
Steps to Get Rid of Credit Card Debt

Talk to your credit card company.

This is both the easiest and hardest step to take. It is easier to avoid the debt—that’s why debt collectors have such a hard job. But you will have a better chance at negotiating your credit card debt if you call them before they or a third-party debt collector calls you. You may not get a friendly voice on the other end so don’t be afraid to haggle if you are not getting what you want.  The next steps involve how to reduce or erase your credit card debt.

Negotiate a lump sum payoff.

If you are having financial trouble, you may not have access to a lump sum of money. But if you can erase a lot of money off of your credit card debt, think about asking a friend or relative to borrow the money. But don’t pay the full amount with interest. The point of paying it off with a lump sum is to pay a lower amount. Negotiate until you get a good deal from the company.

Ask for a hardship or structured payment plan.

With this plan, your credit card company will freeze the debt while it negotiates a plan with you. You may get the interest rates lowered, too. Be sure to ask the credit card company if any annual fee can be waived, too.  Many credit card companies have a hardship plan and will work with customers with a positive payment history. This is a good option if you think you will get back on your feet in the near future. This plan may not work for you if your financial problems are long-term.

Workout another payment arrangement long-term.

Ask the credit card company if they will reduce the monthly payments and interest so that you can afford the bill. The downside is you will no longer be able to use the card’s credit limit (if it is not maxed out already). This is often called a “workout” arrangement because it will allow you to work your way out of the payment. You will have to stick to the arrangement you make or in many cases, the credit card company will be able to revert back to the original terms of the card. Make sure you read the fine print.

Talk to a debt relief specialist.

Sometimes the credit card companies won’t negotiate with you. But you still have options. Debt relief specialists can negotiate on your behalf to have your credit card debt erased or reduced. Be prepared to present all of your financial records and not just the credit card debt so that the debt relief specialist can have a complete picture of your ability to pay. Using a debt relief company takes the stress away from you and helps you get your credit card debt reduced.
Finally, no matter what you do make sure you have the agreements in writing. You don’t want the company to try to obtain the full credit card debt when you have agreed to a reduction.

Steps to Get Rid of Credit Card Debt

Debts like credit cards and other consumer debts are wretched parts of the American households. Credit card companies put up attractive ads that promise to shower all sorts of freebies to their customers. According to the Federal Reserve, nearly 58% of the common people have outstanding credit card balance.

This shows that people need to start taking steps to get out of debt that is incurred because of unwarranted use of credit card.

Steps to Get Rid of Credit Card Debt

Here are the steps to eliminate credit card debt endorsed by the financial experts:

Start budgeting – Budgeting is best way to know about your financial health. At the onset, this might be a difficult task for you, but with continued focus and dedication it will become easier to follow. Budgeting is important because it will help you to identify the reasons for your bad purchases.

You should keep aside a part of your monthly income for recreational purpose. This is because essential monthly expenses like mortgage payments, house rents, groceries, insurance and so on will take up the lion’s share of your salary.

Creating a monthly plan for your expenses can certainly help you to stay inside your budget and increase your capacity to repay all your loans.

Make a list of all your loans- Make a complete list of your outstanding balances, interest rates and charges and rank them. Mortgage payments and vehicle payments may take the loin’s share of your monthly income since they fall in shelter and transportation category.

You can also trim your monthly expenditures to accelerate the loan repayment process and find new ways of reducing your expenses. You can also monitor your expenses and save up each pennies.

Deal with one credit card at a time- If you cannot cope with multiple credit cards, then deal with one at time.

Refrain from more debts – You are already overwhelmed with the present debt amount, and it would be wiser on your part to stop adding any more debt and increase your burden. If you keep using credit card irresponsibly, then you are digging yourself deeper into debts. The biggest challenge would be at this time is to abstain from all kinds of loans when you are already struggling.

Pay the maximum amount- The more you pay down each month, the quicker you can free yourself from all the financial nightmares you have. Those who make the minimum payment, their loan may continue for lifetime.

Use cash frequently – You must start using cash frequently and avoid keeping those cards with you. You may tend to overspend, if you carry your credit cards with you. Therefore, it will be a lot helpful, if you use cash to pay for almost everything. This way you’ll feel the pinch, every time you take out the money to pay someone and eventually save some good money.

Request for low interest rates from creditors- You can get a reduced interest rate on credit cards if you have a good past track record of repaying loans or you are a long-term customer who makes payments on time. The creditors may spare you and ask for lesser interest rates which will help you to save thousands of bucks annually.

Make more debt payments – You must make good use of all the spare cash left with you. Add those extra cash to the debt payment amount to pay off your highest interest rate debt, faster.

Ask for loan from friends and family members- This could be a good option to get rid of credit card loans quickly. If they agree to help you, do not forget to use a written contract with an established schedule for repaying and interest rates. Pride and peer pressure could motivate you to repay your debts to them as soon as possible.

Once you start living within your means, follow a good budget and reduce the unnecessary expenses, then only you can eliminate all your debt problems.

Strategies for Limiting your Debt in the New Year

As the New Year begins, those feelings of hope and joy about the promise of the New Year are easily replaced by feelings of helplessness when your credit card bills arrive in the mail. Many people rack up huge amounts of credit card debt while attempting to give their loved ones what they wanted for the holidays.

If you have put yourself in this position, the unfortunate truth is that only time and regular paychecks can get you out of the debt that you have already incurred. That being said, there are several steps that you can take to limit the amount of debt that you build up this coming year.

Strategies for Limiting your Debt

The most obvious answer is: “Don’t purchase what you don’t have money for!” However, many people experience circumstances that force them into using their credit card. Here are a few tips that will help you limit your debt in 2014:

• Minimize In-Home Expenses

The truth is that many people overspend money on their household ‘needs’. The gas bill, phone bill, cable package, home insurance, and rent contribute to your overall run rate.

Shop around with several insurance companies to explore the possibility of bringing your monthly payment down.

Purchasing several small space heaters to place throughout your home or apartment may help to reduce the amount of money that you pay out to your gas company every month.

With the popularity of cell phones these days, do you really need that land line at home? Disconnect it and that money will stay in your pocket. Cable television is in the same boat as your home phone. More companies are beginning to offer TV shows for free if you stream them online. Better yet, make reading your home entertainment or downtime pleasure.

You will also benefit from seeking bargain deals at the grocery store every time you visit. Finding cheaper alternatives, especially when buying bulk items, can add a significant amount of money to your wallet. Promotional coupons, buying sale items or store label items all contribute to reduced spending.

You should also consider saying “no” more often when asked to host or cater family gatherings or ‘football night with the friends’. This will significantly reduce the amount of food goods that you purchase and don’t consume yourself.

• Movie Madness

Whether we like it or not, this country is incredibly infatuated with Hollywood. Trips to the movie theater are frequent for family occasions, date nights, or chill time with friends. Many people will make at least 15-20 trips to the movie theater every year. This is most likely even a conservative estimate, but 20 trips at $12 or more per ticket will add up quickly. You do the math!

Movies are expensive. Especially if you are going in the late afternoon or evening. Try attending more matinees this year to save some cash. $6.50 rather than $11.75 sounds like a bargain any day!

Furthermore, renting movies via Red Box or Blockbuster, or simply streaming movies online will render the movie theater almost obsolete, so long as you can curb your enthusiasm to see that killer action movie on a humongous screen!

• ‘Friends with Benefits’

No, no, it’s not what you think! Many of us know several friends, or friends of friends, that offer some sort of service that you regularly pay an exorbitant price for.

Finding friends to take care of handyman work around your house, cut your hair, take your Christmas Card photographs, or care for your pet while you go on vacation will save you a considerable amount of money.

Yes, it might sound a bit like you are taking advantage of your friends. This is not the recommendation. Friends will simply offer these services at a much lower rate than the normal contractor. Furthermore, friends will tend to be more open to homemade gifts, baked goods, or other non-traditional forms of payment for their services.

Nobody enjoys digging a ‘debt hole’. Going forward into the New Year, minimizing your in-home expenses, reducing the amount of money you spend on movies, and seeking out ‘friends with benefits’ will help you to reduce your budget and, subsequently, reduce the amount of debt that you find yourself in at the beginning of next year!

3 Things You Should Know About Credit Card Balance Transfers

Credit card balance transfers refer to the act of transferring the outstanding balance of one of your credit cards into another card with a lower interest rate. Pretty simple concept, right?

Many people think of balance transfers as very beneficial in their attempt to reduce their monthly payments and get themselves out of debt. Which it can be. However, it’s not always a positive step. Just like most debt reduction plans, it will work for some situations, but not others. So consider all the benefits and drawbacks before you use balance transfer as your debt reduction strategy.

First, you should not just transfer the balance of one of your credit cards into another card that has low introductory rate without reading the fine print. This means that you have to be careful in choosing a credit card company that allows you to transfer your credit card balance to ensure that you will be getting a good deal. You need to consider the fees for making the transfer. Usually its worth it if the low interest period is at least 6 months. But it’s a good idea to figure out how much you will be paying, how much you will be saving each month, add it all up, and make sure you will be coming out ahead.

Second, you need to make sure you are able to pay on time. Usually you lose the low interest rate if you are more than 30 days late on one or two payments. If you tend to miss payments frequently, then you lose the benefits of the balance transfer. And the new rate may end up being higher than your old rate. So make sure that you have a system for paying on time so you don’t end up on the wrong side of the equation.

Third, it is also important for you to remember that credit card balance transfers don’t get rid of all your debts on their own. The concept behind the transfer is to lower your interest rates. And that can be a big savings, especially over the course of several months. But you are still required to keep paying your balances. So you need to write down all of your debts, factor in the new interest rates, and come up with a plan for paying them all off.

In your search for the best balance transfer card, it is important for you to read the agreement first so you know exactly what you are getting into. Check out the length of the introductory rate period, the annual percentage rate, the annual fees, the balance transfer fees, and the penalties if your payments are late.

If you want to get the best balance transfer card, then it is advisable for you to go for one with a zero percent balance transfer period. But sometimes you can get a slightly higher rate, for a slightly longer time period. So once again, write down all of your debts and do the math to figure out which option is better for you.

Finally, make sure to know when the low rate will end, so you keep transferring balances if needed, and save the most amount of money!