Never assume that you can’t improve the terms of your credit card payments. Many people are unaware of the power they possess inside of them! Our job is to tell you…you can do it… we have…we’ve suggested it to others…they have and they’ve seen results. Here are 2 tips to help you start chipping away at your credit card debt.
Get Your Interest as Low as Possible
If you have a solid track record of paying on time and your card is not close to the limit, renegotiate the interest rates on your cards. Tell the companies that you’ve been a valued customer for X years and you have never missed a payment. You would like to see if they can give you a better interest rate on your card for being a valued member.
I promise you it works! It may not work overtime, but I’ve done it and other clients have done it and it works. The trick is not to bother them. Call once every 6-12 months to request a better interest rate. Usually they decrease your interest rate by 1/2-1 percent. Although this amount does not sound like a lot…you are starting the process of saving more money.
Side tip: If you are given a decrease, calculate your payments based on the higher interest rates and pay that amount… you will be lowering your balance and climbing up the ladder toward financial freedom.
Pay off Debt from Highest Interest Rate to Lowest
There are different strategies to paying down debt. Some need small victories to motivate them to larger victories. This would be, for example, paying off the credit card with the smallest balance first. Once this card is paid off, you feel accomplished and energized to move on to the next. While I like this method, and use it depending on my mood, I think the best strategy is to pay the highest interest card first. This is the mathematically correct way of doing things. You may end up spending thousands of more dollars in interest because while you paid off your $1000 card at 10% interest, you still have a $5,000 card with a 15% interest accruing over time. Interest is pretty much you giving away your hard earned money. Go with the mathematically correct way! Do not go with your emotions. Paying off small debts may feel nice but it’s a superficial feeling. Superficial feelings get people in trouble. Trust math. It has no emotions.
Financial Freedom requires determination and strategy. Pick which works best for your discipline level and for your wallet.
Our goal is to help our clients, improve their credit worthiness in preparation for a home purchase. For more information, please contact us and schedule your free no obligation consultation.