7 tips to reduce credit card debt

If you need to reduce credit card debt, these tips will help get you started. If you're in a situation where your credit card debt is out of hand and you're struggling to pay it off, then jump to these helpful tips and warnings.

Tips to reduce credit card debt

1. Start budgeting so you don't have to use credit cards. By living within your means and getting on top of your finances, you can start to use your credit cards as they're intended.


2. Pay off your credit card in full every month. Most credit cards offer an interest free period for any purchases. If you pay off your card within the interest free period time, you don't pay any interest.


3. Use your credit card for its proper purpose: a short term loan for an amount that's not accessible in your current account. It should be paid off every month to keep the interest at bay.


4. Don't use your credit card for cash withdrawals. These often aren't included in the interest free period and the interest rate on withdrawals is usually sky high, so you end up paying a lot for this privilege. Cash withdrawals are also the last element on your statement to be paid off, so if you don't pay your balance in full each month, the cash withdrawal will accrue lots of interest at high rates. If you don't have the money in the current account, then you should consider living within your budget.


5. Cut up your cards so you're not tempted to use them. This one is nice and simple. To reduce your credit card debt or get control of your finances, this is the best thing to do.


6. Use a 'balance transfer' to consolidate your credit card debt onto a lower interest rate. This won't reduce your credit card debt, but it will reduce your interest payments, so you pay less overall. It will also help you manage your payments. Don't be tempted to use those credit cards again though, cancel them and cut them up!


7. If you're serious about wanting to reduce credit card debt, then you should use any savings to pay it off. Your money will work much harder for you paying off a debt with an interest rate of 18% than earning a low interest rate in a savings account, especially now when interest rates for saving are so low.

A few additional tips and warnings for credit card debt!

• Don't use your credit card for cash withdrawals as it becomes very expensive. There's often no interest free period, the rates are higher and it's the last thing to be paid off when you make a payment. This means that the cost of taking out money on your credit becomes VERY expensive.
• If you're struggling to make loan repayments, credit card payments and you're at your overdraft limit, any money that comes into your current account may be taken by the bank or building society to cover any debts to them. This can be risky for you as you may not have enough to pay priority bills such as your mortgage, rent, gas, electricity or council tax. In this scenario, you should open another bank account with a different provider and have your wages paid into it. You can then start negotiating with your bank about paying back your debts.
• If you're trying to make arrangements to repay and reduce credit card debt, you should ask the bank or building society to stop charging you interest and any late charges. Let them know you're trying to deal with the debt and offer to make a regular payment. Point out that the Banking Code states that banks will be 'sympathetic and positive when we consider any financial difficulties you may have'. They're there to help and after all, they want their money back so it's in their interest to help you!