Credit cards that come with high fees.

How To Reduce Your Monthly Credit Card Payments

Credit card debt can sneak up on you. A little spending here and a little spending there really adds up. Before you know it, you have hundreds of dollars in monthly minimum payments to make. Fed up with the wasted money? Here is how you can reduce your monthly credit card payments.

Why Should You Care about Debt?

First, why should you care about debt? Debt is a part of life. Whether it’s a mortgage, car loan, or 8000 dollars in credit card debt, it’s important to understand the role debt plays in your financial life.

Debt can be useful when used responsibly because it provides people with access to things they might not otherwise be able to afford such as a college education and home ownership.

However, if you find yourself unable to make your monthly payments on time or unable to pay off your balance entirely at the end of each month, then you could be headed for trouble. If you are in this situation, there are ways to get yourself free of those monthly payments, or at least reduce them. Have a look.

Option One: Pay Off Your Debt

Obviously the best option is to pay off your debt completely. This is the best long term approach, but it is also the hardest way to reduce your monthly credit card payments. If you are ready to take on the challenge, here is what you need to do.

Step 1: Get Organized and Be Ready with Your Plan of Action

Before you do anything else, it is important to get organized. Sit down and create a list of all of your debts, the interest rates on each one, and how much is owed on each one. Include any cards or loans that are not credit cards as well. Once this list is complete, create a monthly debt repayment plan for yourself that includes what needs to be paid every month in order for you to clear all debts within a given time frame. The time you choose depends on how much debt you are carrying.

Step #2: Start by Making the Minimum Payments on Your Cards as They Fall Due

The minimum payment amount for credit cards is the amount that you will have to pay when a statement comes out. The minimum payments are usually calculated based on the balance and the interest rate.

Make sure that you are paying these minimums on time to avoid added costs like late fees and higher interest rates. One missed payment can lead to your account defaulting to a higher interest rate, so be careful.

Step #3: Pay More On One Card

If you are just making minimum payments, how can you get rid of the debt though. You can do this by making extra payments on one card or increasing the amount you pay each month.

Ideally you want to choose the credit card with the highest interest rate. That will maximize the value of your payment and decrease the total interest you pay. If you need motivation however, choose the card with the lowest balance. You will be able to pay off this card faster, which can be very motivating.

Option Two: Negotiate A Lower Credit Card Payment

Can you really negotiate a lower payment on your credit card? Absolutely and you do it by asking your credit card company to reduce your interest rate or the actual payment or both. Keep in mind that even a few points reduction in your interest can save you hundreds of dollars over the course of a year.

The negotiation process for credit card payment reduction is pretty straightforward. You simply need to call your credit card issuer and ask. It really is as simple as that. Will all of them relent and grant your request? No, but it is worth asking, so call all of them. If you have been a good client and have made your payments on time, you are likely to get a favorable outcome.

In any case though, the payment will never fall below the monthly interest accrued and this is a temporary solution to lower your monthly spend.

Option Three: Consolidate Your Credit Card Debt

Consolidating your credit card debt is a great way to pay off your credit card balances. It can help you save money on interest payments, and it can also help you get out of debt faster. If you have multiple credit cards with high balances, this is a viable option to lower the total of your monthly payments.

For the best results with credit card consolidation, you should have good credit. Consolidation involves taking out a loan which you will use to pay off your smaller credit card accounts. As with any loan, your rates and fees will be determined by your credit history.

For this reason, you should check your credit before you proceed. This will give you the opportunity to find and fix any potential errors on your report. Check your report at least two months before you intend to apply for consolidation. This is how much time is needed to check and fix a credit issue.

Once you do apply for a loan, make sure that it will actually save you money. Even a few points reduction in your interest will help, but not if the loan comes with additional fees that offset the savings. Check the loans APR to make this determination. The APR is different than he interest rate in that it represents the effective interest you will be paying once you add in loan fees.

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James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.

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