Reduce Credit Card Interest Debt With Out Damaging Your Credit

Reduce Credit Card Interest Debt With Out Damaging Your Credit

The first step in paying down your debt is to reduce your interest rates. Gather all your credit card statements so you have them in one place. This includes major card carriers such as Visa and Mastercard, department stores, gas cards and specialty store cards. Call every one of them with one of the following scripts:

Script 1: I've visited the websites of several of your competitors, the "Blank" Bank and "Blank" Bank, and found that they are offering a way better interest rate on purchases than your bank which is 3% points lower than what I'm paying on my card. Are you willing to give me that rate?

Script 2: I am requesting that you reduce my current rate of 16.9% to 8.9% so that it is in line with what is available in the current market. I feel this is a fair rate since at least three major other credit card issuers, Bank of America, Barclays, and Citibank are offering it to new customers like me who have an excellent credit rating.

Script 3: I have received a pre-approved offer in the mail from "Blank" Bank offering me a 0% interest rate card for 12 months than 9% there after. Can you beat or match that offer or do I have to transfer my balance to their card?

Script 4: I visited your website and noticed that you are offering a "blank" rate to attract new customers. I have been an excellent customer of yours for "blank" years and would like to receive the same rate.

You will be amazed at how easy it is to get a lower rate on your cards. Even though this does not work every time you ask if just by asking you get a lower interest rate you will be instantly saving money and maximizing you time. Every time you transfer debt to a lower interest rate, you've found more money every month with which to pay down your principle. Also, if you have avoided a balance transfer fee which banks usually charge a 3% fee on by keeping your money with the same bank you will drastically save money as well.

With credit card payments, the monthly bill is usually 2% of your balance, but recent legislation increased that to a 3% minimum or 36% a year. For a rough estimation of the impact of reducing your interest rate, subtract it from 36%. So if you are paying 18% in interest, only 9% goes to pay down principle. Every percentage point you reduce your interest rate means $1 more per every hundred dollars goes to paying down your debt.

The second step in paying down your debt is to pay your cards with the highest interest first. Once you have the lower rates, make a list of all your cards, the minimum payment required, and the interest rate on the card. Sort that list, placing the card with the lowest interest at the top, down to the one with the highest interest rate.

Now start paying your bills in that order. Pay the minimum amount required on all bills but the last one, the one with the highest interest. Put all of the extra payment money in your budget towards that bill. This method will bring your debt down consistently, while lowering the overall amount you are paying in interest every year. As a result of the reduced principle, a greater amount of your payment goes to principle payoff with each payment you make. Be sure to reorder the list periodically if necessary due to interest rate changes.

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