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  • Financial Planning: Credit Card

    By Rachel Byers, Full-Time Faculty, Kaplan University 
    Published September 2014

    Is credit card debt haunting your dreams at night? Do you want to get serious about getting rid of it for good? One strategy for doing so might surprise you!

    How often do you check the mail and immediately toss the countless credit card offers in the trash on your way back inside your home? Next time, you might want to consider hanging on to a few of those, as they may hold the key to being debt free.

    Before diving into how you can use your existing credit cards to help you get out of credit card debt, there are a few things you need to do first:

    Stop Using Your Credit Cards.

    This seems simple, but it is the first step in knocking out credit card debt. By only paying with cash or a debit card, you are essentially ensuring that you aren’t spending more than you have in your bank account at any given time.

    Call Your Card Company.

    A sincere plea to your credit card company can go a long way. Many companies are willing to lower your rate for a period of time to help you catch up.

    Cut Expenses.

    If you had enough cash on hand to pay off your debt living and spending as you currently do, you probably wouldn’t be reading this article. Something has to change. First, cut expenses everywhere you can. Do you need cable and Netflix or could you survive without one (or both)? Do you need to eat out for lunch every day or could you bring a sandwich? Do you need that large mocha latte every morning or would a cup of coffee from home suffice? While $3.50 for a latte doesn’t seem like a lot, it all adds up!

    Increase Income.

    Have you had a yard sale lately? Do you expect a refund when you file your taxes? If so, get your return filed and use your refund to pay down your debt. Would you qualify for food assistance? Groceries can really add up, especially if you have kids. The money you save by using your state provided food assistance could really help hammer down those credit card balances.

    Once you’ve done these things and really gotten serious about getting out of credit card debt, consider using balance transfer offers to rearrange your debt. You may have a credit card that you haven’t used in a while (that has a zero balance) that is currently offering 0 percent interest for 12 months on balance transfers. While this may seem like a good idea on the surface, you really have to run the numbers to make sure it is a good option. You can use a balance transfer calculator like the one at www.creditcards.com/calculators/balance-transfer.php to make sure that the items in the fine print (like the balance transfer fee or the rate after the promotional period expires) doesn’t eliminate the benefit of the transfer altogether.

    If you are serious about getting rid of credit card debt, these tips will help you achieve your goal! So, don’t keep putting it off—that beast will continue to grow until you put it to rest. You can do it!

     

    Rachel Byers is a full-time faculty member at Kaplan University. The views expressed in this article are solely those of the author and do not represent the view of Kaplan University.

    The contents of this article are presented for informational purposes only. Always check with a professional regarding any questions you may have regarding financial services.

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