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3 ways to manage your credit card debt

Managing credit card debt is a fact of life for most Americans. As a nation, our credit card debt is only exceeded by our student loan debt. During uncertain economic times, these resources can be a lifesaver. The hard part happens when things begin t o swing back upward and it comes time to pay them off. Luckily, there are some proven strategies that can help you get that debt under control and on its way to paid off.

1. Consolidate

First and foremost, remember that your credit cards are designed as short-term unsecured debt, and that means that their interest rates are a little higher. They also function as revolving credit lines, which makes them a little riskier to the creditor too. One way to lower your interest rates and make payments faster is to consolidate your debt. If your credit qualifies you for a loan, many banks have options that are specifically designed to help you work on this issue.

You can also attempt to consolidate your debt using other credit lines, by doing a balance transfer onto your lowest card. Some people with revolving credit lines on their mortgages also find that they can transfer credit card there to gain more favorable terms.

2. Pay large bills first

The largest balances you are carrying are the ones that will take the most time and money to pay off, but they are also the ones accruing the most interest. To knock down the amount of interest you are paying, consolidation is sometimes not enough. By paying off the largest balances first, you are able to more quickly reduce the total interest you pay every month, freeing up that money to pay down the principal. This strategy is especially important to keep in mind if you are unable to consolidate all of your debts into a single loan.

3. Negotiate with your credit card company

Credit card companies want your debt to be paid down without having to go to collections and without having to worry about contingencies like bankruptcy. That means they are typically willing to listen if you call ahead of bills being late and you negotiate a payment plan that makes sense. Typically, a lower interest rate can even be negotiated if you are persistent enough.

When debt spirals out of hand and progress on it becomes impossible, bankruptcy does exist as a last resort, and if you are considering it, you should probably talk to an attorney to be sure you understand the available alternatives and consequences. That way, you can be sure you are making the most informed choice as you move forward.

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