So you are looking for ways to reduce your credit card debts, right? Well, you have come to the right place my friend. I know you do not have much time for niggling introductions, so lets start with it right away. Explained below are some techniques based on pure common sense that you can use to reduce your credit card liabilities.- Avoid having multiple credit cards
Stuffing your wallet with all the available credit cards may certainly seem quite alluring, but you should think twice before doing so obviously because then you are most likely to become a victim of the vicious debt cycle. For better debt management, it is recommended that you limit your credit card stock to two, at the most. - Do not give in to solicitations
If you are a heavy spender, chances are high that you might be receiving hundreds of solicitations from credit card companies every year. All these solicitations may be quite tempting, but you should not give in to them easily because these offers do not necessarily reflect that your excellent credit rating. You may not know it but the fact is that credit card companies send solicitations to every Tom, Dick, and Harry, who is there in their records. For proof, you just need to contact your defaulter friend or associate who might as well have received even more solicitations from credit card companies. - Go through the terms & conditions (T&C’s)
Solicitations normally advertise low-interest rates in order to befool users such as you into signing in on the dotted line. If you do not read the T&C’s carefully, you might easily end up paying more than the advertised interest rates. You see, most credit card companies include a conditional clause that allows them to make changes to your existing rates as and when needed. So, if you want to reduce your debts, just go through the T&C’s and try to avoid solicitations that include the conditional clause. - Do not hesitate to contact the lender
Unless you are a lawyer, it is highly unlikely that you will be able to make much sense of the T&C’s stated in credit card solicitations. However, since it is quite important to understand the real implications of the mentioned items such as such as annual fees, late charges, membership fees, it is recommended that you contact the lender directly and get the necessary clarifications. Never feel embarrassed to ask even the simplest of questions because if you do not, you might have to face even more embarrassments in future when filing for bankruptcy may no longer be a far-fetched thought. - Discard solicitations that advertise ‘teaser’ rates
Very often you will find that credit card companies advertise ‘teaser’ rates that are much lower than the existing market rates. These may seem quite tempting, but if you apply common sense, you can easily realize that somehow the company will still make profits. And you are right; credit card companies do make profits even with the offered teaser rates. They just increase the rates after a few months, which is often more than the existing market rates. This is why you need to reject solicitations that offer ‘teaser’ rates. - Do not let variable rates affect your decisions
Variable rates are no doubt appealing considering the fact that there is always a chance that your interest rates might come down. However, since it is difficult even for accountants and lawyers to understand and project the real implications of a variable interest rate regime, it is recommended that you think twice before opting for solicitations that offer variable interest rates. - Check out the late payment charges and penalty rates
Looking for a card that offers low-interest rates should no doubt be your first priority, but you should never forget to give equal importance to other factors as well such as late payment charges and penalty rates. If you sign in on the dotted line without giving due consideration to these factors, you could easily end up paying high late payment charges and penalty rates, something that will negate the benefits of low-interest rates. - Consider the offered Grace Period
If you do not want to get affected by niggling mail and bank delays, then it is recommended that you opt only for those credit cards that offer an appropriate grace period. You see, since there are many factors that can restrict you from paying off your installments, it is always better to have a certain grace period at your disposal. - Do not fall in love with the “minimum due” amount
Just paying off the ‘minimum due’ amount as stated may certainly be enough to keep using your credit card, but if you want to avoid facing insurmountable debt problems in the near future, it is recommended that you allocate something additional every month towards your credit card payments. If you do not do so, your interest portion will zoom through the sky, something that might as well lead to bankruptcy. - Get your priorities right
When faced with debt related problems, make it a point to set your priorities right. For example, if you only have a few hundred dollars remaining as your credit limit, then it would be better if you follow the thumb rule that states that you should give preference to necessities such as food, clothing and shelter. Rest of the things can come later when your financial position improves and when you have no problems in paying off your monthly installments. - Do not hesitate to cancel
If you feel that the only way you can possibly alter your spending habit is by throwing your credit card in the garbage, then you are free to do so. However, since the usefulness of credit cards can never be denied and since you never know when you might feel the need for your credit card, it is recommended that you request the lender for temporary suspension and reserve the right to get the service started as per your convenience. - Do not try to catch up with the Joneses
You credit limit may only be a fraction less than that of the rich and the famous, but even then you need to avoid over-indulgence, especially the things that you do as a result of peer pressure or to impress upon your neighbors. Just use your common sense to decide what are the things you really need and what would be categorized as over-indulgence. Living within your means may not seem as alluring as doing just the opposite, but if you want to avoid ruining your life with credit card debts, then that option is certainly your best bet. - Be aware of your rights
You should always be aware of your rights because more often than it is the credit card companies that make mistakes while making calculations. As a consumer, you have every right to defend incorrect changes debited to your account and ensure that they are deleted from your records. This is why you need to keep abreast with the latest changes and developments in the applicable credit card laws.
Written by Craig D. Robins, Esq.
