Up next in Credit & Credit Cards (16 videos)
Save money and stay out of debt with the advice in this Howcast video series about credit and credit cards.
You Will Need
- List of monthly expenses -- utilities, car payments, mortgage, etc.
- Latest credit card statements
- Bank statements
- And paper and a pen
- Retirement fund statements (optional)
- And an investment portfolio (optional)
Cut all cards but one
Cut up every credit card except one. Lock that one away for emergencies.
Add up debt
Add up your total amount of debt.
Calculate your assets, including savings, investments, retirement savings, etc.
Tally monthly income
Tally the total amount of monthly income coming into the household.
List each card's debt
List each credit card, the amount you owe, and the interest being charged on a piece of paper.
Lower interest rate
Get in touch with your credit card companies and ask them for a lower interest rate. Tell them you will be forced to close your account once it is paid off if they can't provide a better rate.
Prioritize your credit card debts, beginning with the smallest amounts, then moving on to cards with the highest interest rates.
If some of the credit card companies will not lower your rates, transfer those balances to another card with a lower rate. These companies compete with each other for business, and are always seeking new customers with this enticement.
Ask about loan
If a balance transfer doesn't help or isn't possible, consult your bank about a debt consolidation loan. You'll end up with one monthly payment, and you'll pay less in the long run than you would with several card balances.
Spend savings on debt
Part with your savings. Most savings and money market accounts are currently paying less than 5%, while credit card interest can be as high as 35%! At that rate, it would take you almost 20 years to pay off a measly $500 balance, if you only paid the minimum due each month.
Examine monthly expenses
Look at your monthly expenses and see where money can be saved. For instance, getting your internet access, phone, and satellite or cable TV from the same provider can reduce your bill by 30%.
Track every penny you spend for a month. You'll quickly see how those fancy coffee drinks and forays into McDonald's add up. Apply the savings to your credit card debt.