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Do You Have Too Much Credit?
Do you have too much credit in the form of too many credit cards? These days, it may be a common situation to own several credit cards. Besides MasterCard and Visa, most department stores offer easy credit terms with low monthly payments. Why, every day, in with the mail comes a new credit card offer. Credit card companies proudly offer zero interest for six months. Then, after the six months have passed, the interest may jump to 12%, 17% or even higher. But, because it feels like free money, it may be hard to resist the temptation to sign up for another credit card. What if you already have 17 credit cards or more and you realize that it’s just got to stop. How can you reduce the amount of credit card debt you already have? Reduce the Number of Credit CardsOne very important piece of advice is to always pay more than the minimum payment. Otherwise, you may not be paying much more than the interest on the account and payments will drag on for years, without ever significantly reducing the actual debt. Practice self-control when it comes to using your credit cards. Be careful not to use the card unless its an emergency. Be careful not to consider everything an emergency. If you feel that you have too many credit cards, once you have paid off an account, cut the credit card up, throw it away and request that the company close the account. Be sure to ask them to report to the credit agency that you requested that it be closed and not that it was closed by the company. That affects your credit score in a positive way. Continue to reduce the number of credit cards this way until you have it down to one or two credit cards with the best interest on them that you wish to keep in the event of an emergency or to reserve hotels or airline tickets with.
Credit Card ConsolidationIf you are struggling to make the payments on your credit cards and it seems impossible to make more than just the minimum payment on them, you may have to consider credit card consolidation. For this, you will apply for a consolidation loan through a bank or finance company to pay off your credit cards and then have only one payment each month. This is where you really need to be careful, because again, temptation to incur more debt once relief is felt can be very strong. If you can control the urge not to rack up more debt, you could consolidate or transfer all credit card debt to one new credit card with zero or very low interest. Take advantage of the interest while it is low and make as high a payment as possible, then when the six months or whatever time limit the card has offered for low interest is up, transfer again to another new card with no or low interest. Repeat these steps until the debt has been eliminated. Be sure to destroy the credit cards with no balance on them to make it easier for you not to use them. You may leave the accounts open if you like, because this can improve your credit score with the credit/debt ratio. If you are still having problems, you might consider some credit counseling. Here are a few links to non-profit organizations that offer assistance. ConsolidateCredit.org |
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