How to Cut Credit Card Debt

Most Americans have too much credit card debt. We've all heard that before, right? Only now it's gotten a bit personal... right again? You personally have too much credit card debt and it's about to drive you crazy. Reduce your debt now by following these steps.

Steps

1. Keep in mind that your creditor is probably very willing to work with you. It's in his or her best interest to have you making some payment versus no payment. So here are a couple of points to help you deal with your credit card debt.
   
2. Contact your creditor and explain your situation. Ask for a lower interest rate or a repayment plan.
   
3. Stop using your cards. Cut them up, freeze them in a tub of water, whatever you need to do to get them out of your wallet or purse, do it!
   
4. Pay off the cards with the highest interest rate first and work from there. How do you do that? Call the companies and pin down exactly what rate you are actually paying on each card.
   
5. Keep your chin up and have a good attitude. Millions of folks just like you have begun to cut their credit card debt by following the common sense steps outlined above. You can do it too. Good luck.
   

Tips

• You might not have thought of it because you're just naturally so polite, but it's a very good strategy to be courteous at all times when negotiating with your creditor. Polite, but firm. Come across as one who knows what you're asking for and expect to get it.
  
• If you're not sure what you're asking for in the first place you might consider a reputable credit counseling service. There are many honest organizations out there whose mission is to help you work things out with your creditors.
  
• Avoid the temptation to keep adding to the problem by running your debt up any higher. This is actually one of the hardest parts of cutting your credit card debt. It's like you're addicted to spending money you don't have. So go cold turkey and drop the habit.
  

Warnings

• Pay more than the minimum balance each month. The minimum is designed to keep you on the hook longer. The credit card companies are in this business to make a profit and want to have you paying them for years to come. Even a little extra each month makes a big difference in the long run and may cut years off your payments.
  

Related wikiHows

• How to Get Your Credit Report for Free
  
• How to Avoid the 5 Most Common Reasons for Credit Denial
  
• How to Establish Credit
  
• How to Cut up and Throw Away a Credit Card
  
• How to Lower Interest Rates on Your Credit Card
  
• How to Bank
  
• How to Start Living Frugally
  

Sources and Citations

• Resources to Cut Credit Card Debt
  

Article provided by wikiHow, a collaborative writing project to build the world's largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Cut Credit Card Debt. All content on wikiHow can be shared under a Creative Commons license.

How to Teach Teens About the Dangers of Credit Cards

Credit card companies are increasing their marketing to teenagers. Many teens don't know much about credit card debt, but issuers sure do know a lot about them, and they want their business. As a result, teens are in serious financial danger. If you'd like to teach teenagers about the dangers of credit cards, then read on...

Steps

1. Do your research. Read up on credit card companies, the national debt average, and interest rates. Did you know credit card companies are allowed to visit many high schools and colleges? You may want to warn your teen. They will probably ask questions, so be prepared to answer them.
   
2. Talk to them sooner, rather than later. It's not unusual for parents to begin talking about credit cards to children as young as nine years of age. Why? Because kids these days are exposed to much more, and they may have questions for you already.
   
3. Share a personal story. So, you're $50,000 in debt, huh? Instead of being embarrassed, tell your teen the truth. Let them know how scary it is to be so close to losing everything. A personal story told from the heart works better than stories about strangers they don't know or care about.
   
4. Show them the figures. Let your teen know just how much money companies are making. Also show them the national debt average; millions of people are losing their hard-earned money to these companies. It's simply not fair, especially when it's so easy to be smart about your choices.
   
5. Use visual aids. A giant chart would be effective, yes, but also use literal aids. Let them check out a real credit card, and explain what all the numbers mean. Tell them what interest rates are best, perhaps on a sliding scale. Show them how interest charges can make a balance of $400 balloon to $2,000.
   
6. Give them a real-life lesson. Part of teaching teens the dangers of credit cards is also showing them how to use credit properly. Once you've thoroughly discussed credit cards, why not let your teen test drive one of their own? Credit cards can be a great learning tool before your teen enters the real world. You can co-sign on a secured credit card, and keep track of every cent your teen spends with the help of online banking. Work up to that final step with these stepping stones:
   
   • First, make sure your teen has a job! In the real world, you must work to pay off your debts.
     
   • Second, get them a checking or savings account. They first need to learn the basics about money management.
     
   • Next let them use a debit card. Tied to the checking or savings account, this works just like a credit card--without the actual credit. Your teen will be spending their own money, so they'll be less likely to blow it all at once.
     
   • Then set up a credit card under both of your names. Teach them how important it is to keep their card safe. Review the paperwork for the card with your teen, going over the interest rates, payments, and charges. Set a limit and monitor what they spend.
     
   • If and when you feel they are ready for their own card, help them look for the best card possible. Be sure to stress the importance of good credit history--if they mess up too much, they may not be able to rent an apartment or get a vehicle. Also show your teen how to get their credit report, and teach them how to avoid identity theft.
     
   
   

Tips

• Keep them in the conversation. Teens aren't willing to sit and listen to an hour lecture if they're not involved in the conversation.
  
• Ask for their viewpoint. Do any of their friends have credit cards? How about checking accounts or savings accounts? Using their personal touchstones of experience is a great way to teach your teen about, well, anything!
  
• This conversation will probably need to be repeated more than once. In fact, you should definitely keep the lines of communication open when it comes to credit. Use any opportunity you can to educate your teen. Did you get your monthly statement yet? Sit down with your teen and show them how it all works.
  

Warnings

• Don't overload your teen with too much info! Keep it light and interesting, more of a conversation than a straight lecture.
  
• Never let your teenager borrow or use your credit card without discussing credit with them. Would you give your teen the keys to your brand new Porsche and let them go joyriding with their friends? Didn't think so. The same goes for your credit card.
  

Related wikiHows

• How to Choose Your First Credit Card
  
• How to Cut Credit Card Debt
  
• How to Build Good Credit
  
• How to Repair Your Credit
  
• How to Cut up and Throw Away a Credit Card
  

Article provided by wikiHow, a collaborative writing project to build the world's largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Teach Teens About the Dangers of Credit Cards. All content on wikiHow can be shared under a Creative Commons license.

How to Choose Your First Credit Card

from wikiHow - The How to Manual That You Can Edit

If you need a credit card, proceed very carefully...after all, as Mark Twain said "a banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain".

Steps

1. Look for a card that has good benefits. Good benefits may include low interest, promotional interest rates, no annual fee, no bank service charges, air travel bonus miles, credit points toward purchases, credit points toward long-distance phone calls, or credit points for gasoline.
   
2. If offered a promotional interest rate, find out the terms of payment and when the rate will expire. Most cards apply payments to lowest interest charges first, leaving your higher interest charges to collect interest until the entire amount is paid off.
   
3. Ask if there are fees and charges. There may be an annual fee, an application fee, an account service charge, an over-limit fee, a late-payment fee, a cash advance fee, and other miscellaneous fees. Compare these fees to other cards to see if they are trying to rip you off.
   
4. Check the interest rates. Some cards charge interest from the date of purchase. Some cards charge interest from the billing date. Pay all of your bills on time to avoid paying interest.
   
5. Find out if the card offers a standard monthly billing cycle. Some cards expect a payment every two weeks! Ask if there is a penalty for not using your card. Apply. There are usually three ways to apply: through the mail, over the phone and on the internet.
   
6. Activate the card when you receive it. Follow the activation instructions included with the card, usually this can only be done from your home phone. They will try to sell you several services over the phone. Say no. Sign the back of the card before you use it.
   

Tips

• Spend your money wisely, and make your payments on time.
  
• Pay off your entire bill each month (billing cycle). Set a budget on how much you can pay off in one month.
  
• Use your card only within your budget. Do not purchase items that are too expensive, just because you have credit.
  
• If you find you cannot make your monthly payment, stop using the card immediately. Cut the card in half and never use the number again. Cancel all automatic payments that charge to that card.
  
• Banks that back credit cards will frequently ask questions on the application such as "What is your yearly income?" or "What is your current bank account balance?" These pieces of data are what are called "risk splitters." The banks use this information to decide what sort of credit line to assign you. Banks will commonly ask for proof of income as part of the approval process.
  

Warnings

• Make sure that they do not charge any fee for the card, because if they do, they are ripping you off.
  

Related wikiHows

• How to Teach Teens About the Dangers of Credit Cards
  
• How to Avoid the 5 Most Common Reasons for Credit Denial
  
• How to Build Good Credit
  
• How to Cut up and Throw Away a Credit Card
  
• How to Establish Credit
  
• How to Maintain Good Credit
  
• How to Lower Interest Rates on Your Credit Card
  

Article provided by wikiHow, a collaborative writing project to build the world's largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Choose Your First Credit Card. All content on wikiHow can be shared under a Creative Commons license.