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Credit cards, when used recklessly, are a certain one-way ticket to a debt trap. But the same card, if used smartly, can actually buttress your financial needs and afford you that much-needed breathing space as you manage your money. Here are some easy ways to reduce or erase credit card debt-

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Step 1: First call your creditors to negotiate lower interest rates-

Always keep in mind that lower interest rates make it easier to pay off debt. A lower rate means less of each monthly payment you make gets eaten up by accrued interest charges. Thus, you can pay off the principal (original debt owed) much faster.

To do this step effectively:

  1. Check the current interest rate on each credit card you use
  2. Jot down relevant facts about your credit:
  3. Length of time you’ve been a customer for each account
  4. How long you’ve gone without missing a payment
  5. How much your credit score has improved since you opened the account
  6. Check current credit card interest rates to know national average rates for each type of credit card you hold.

Step 2: Prioritize your debts

Step 3: Streamline your budget to maximize cash flow

The more cash flow you have available to reduce debt, the faster this goes. Faster also means fewer interest charges applied to your debt, so it saves you money, too. It’s worth losing a few discretionary expenses for a short time to these high interest rate debts paid off fast.

Step 4: Pay as much as possible on one debt, then minimums on the others

It’s more effective to focus on one debt at a time. You make the minimum required payment on all your credit card debts except the card with the highest APR. You use all the extra cash flow you generated to make the largest payment possible on that one debt. Then you continue to do that each month your balance on that card hits $0.

Step 5: Knock your debts out, one by one

You can also start putting unnecessary expenses that you cut from your budget back in. This will help you avoid burning out on budgeting, which can lead to more overspending. Experts also recommend that once you pay off your credit cards, some of the funds you used on those bills should divert to savings. So, if you save $500 per month on credit card bills, set up a $250 recurring monthly transfer to savings. That way, you can generate a robust emergency fund, which prevents you from relying too heavily on credit cards.

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The next best way to reduce credit card debt

For example, let’s say your biggest balance is $7,000 on a reward credit card at 22% APR. You only have $500 in extra cash you can put towards that debt. Even with fixed $500 payments, it would take 17 months to pay this debt off in-full. It’s almost a year and a half before you clear off that first balance — so, it’s not exactly easy to stay motivated.

However, let’s say you have two credit cards that each have a $1,000 balance. If you put $500 to those, you could finish paying each off in three months (with interest charges). This would clear out two bills, giving you extra motivation and extra cash. Now, instead of $500, you’d have $550 because you don’t have to pay two $25 minimum payment charges.

So, in this case, it’s better to start with your lowest credit card balances, rather than your highest APR debts. You knock out the “low hanging fruit,” which frees up more cash to tackle your largest debts. The steps are the same as the five steps listed above; however, at Step 2 you arrange your debts starting with the lowest balance and ending with the highest.


Is debt reduction even the best choice?

  1. Is this the fastest way to repay what I owe?
  2. Is this the most cost-effective way to reduce my debt?

If there’s a faster, cheaper way to pay off what you owe, then you should do it. In many cases, this method of rolling up your sleeves and tightening your belt may not be the most efficient. It might be easier and cheaper to do it another way.

So, before you waste months (or years) of your life paying off your debt the hard way, make sure there’s not an easier way first. Look into credit card consolidation or call a credit counseling agency. Even though these agencies administer one type of solution — debt management programs — as nonprofit organizations they’re required to review all your options. They’re supposed to tell you what’s the best way to pay off what you owe.

Compare all the available solutions. See what will take the least time, give you the least hassle and save as much money as possible. Whatever solution that ends up being is the best solution to use in your unique financial circumstances.


Kudosware is a tech consulting firm. After 5 years in the industry, we decided to alter direction and now we share our passion by helping others.

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