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Get out of debt fast. Learn ways to reduce credit card debtYou've taken the first step to get out of debt fast by organizing your finances in Budget 101. You've itemized what sources of income you have coming in, and what's going out. You have taken this step haven't you? No? OK, go back to Budget 101 and take that first step. Although some people are afraid of committing pen to paper, until you actually see the situation you can't assess how bad it really is and what steps you need to take in order to get out of debt. And look on the bright side, it may not be as bad as you think.
Now look specifically at your debt load. You need to work out how much you owe. Gather all your credit card statements, student loan and any personal loan statements and make a list that includes the interest rates, total amounts you owe and minimum monthly payments. List the cards in order with the highest interest rate first and so on. Stop charging now! Incurring more debt will only compound the problem with more interst being charged on your interest, and it will not help you get out of debt. Or at least truly resolve to use your credit card only for emergencies or essentials. Keep the card with the lowest interest rate. Cut up the others. Write to the card issuers and close the accounts. ( Check the terms of use before you cancel. Some credit issuers charge higher interest rates on the remaining balance due to people who close their accounts. If this is the case on one of your cards, pay it off and then cancel. Also closing accounts can have a negative impact on your credit score. However, if you cant trust yourself to not use the cards if you have them, close the accounts anyway and take the temporary hit to your score.)
Add up your minimum monthly payments. The fastest way to get out of debt is to put every penny you can to paying off your cards. Add up all your minimum payments. Suppose they come to $500 per month. How much can you really afford to pay - $550 a month? - $800 if you really try? Don't under estimate the benefits of adding even an extra $10 0r $20 a week to get out of debt fast.
The basic premise to paying off debts is to apply all of your additional repayments to the card with the highest rate, while still paying the minimum payments on your other debt. If two cards have the same rate, put the additional money on the card with the largest balance. Once the debt with the highest interest rate is paid off, then you apply the additional repayments to the next debt on your list, and so on until it is all repaid.
Consider consolidating your debt. Save up all those free offers you get for credit cards and choose the one with the lowest introductory rate. Then transfer all your higher rate balances to it. However, again, check the fine print because there is often a balance transfer fee which can be as high as $50 for each balance you transfer. After you have transfered a balance, don't forget to Opt-Out of further offers.
Consider using your savings to get out of debt. This may not sound sensible at first, but if your savings account is only paying 2-3% then you are not earning any money to carry debt at 18% or more. Don't forget to clean up any inaccuracies on your credit report, and its always a good idea to monitor your credit report to check for identity theft
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