Ways to Cut Credit Card Debt

How to eliminate credit card debt—once and for all—is a common topic for personal finance writers. And a popular way to do so, they write, is as follows:

The objective is to eliminate the carry-over balance on one card at a time, until all your cards have a zero balance. The credit card issuers will hate you for doing this, of course. But if you don’t do it, you’ll continue to pay hefty interest charges every month and will owe a balance until you die. Even then, if any relatives or friends are authorized to use your card, those charges will continue until they die.

If you have several credit cards—as most people do—all with carry-over balances every month, select one card and call it Card A. Call the others Card B, Card C, and so on. Then start paying more than the minimum on Card A, while paying at least the minimum on the other cards.

Now here’s where the personal finance writers are divided. Most say that Card A should be the card with the highest interest rate. That’s because—all else being equal—this card accounts for more finance charges than the other cards.

The problem is,”all else” is usually not equal. The carry-over balances are probably all different. Therefore, a few other personal finance writers argue, you should designate the card with the lowest balance and pay that off first. Then you’ll have a card with a zero balance, and anything you charge on it will not be socked with a finance charge—if you pay the balance in full each month.

Naturally, if one particular card has both the highest interest rate and the lowest balance, that’s definitely the card to pay off first.

As soon as you pay off Card A, select another card and start paying off that one, too.

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Paying Your Credit Card Bill by Mail

The traditional way to pay a credit card bill is to detach the “return this portion” of your statement that contains your name, address and account number, along with the address of the payment processing center.

You fill in the amount you’re paying and insert the portion, with your check or money order, in the envelope provided, making sure the center’s address shows through the window of the envelope. Affix a 42¢ stamp (44¢ after May 10) and mail, at least five days before the due date.

The further you are from the center, the more time it will usually take to get there. And vice versa. If you find out there’s a closer center than the one shown on your statement, ask the card company to list that one instead, to save a day or two of transit time.

In case you never noticed, there’s a series of five vertical lines to the left of where you stick the stamp. This indicates to the sorting machine at your local post office’s that there’s a barcode beneath the address, which the machine reads to speed up the processing. If you address a closed-face envelope instead of using the window envelope, this automation is lost and your mail may be delayed.

And that’s important, because if your payment is posted even a minute after the time noted on the back of your statement—e.g., 3 pm ET—on the due date, you’ll be hit with a late fee of $39 or so. Even if it arrived much earlier that day but a clerk didn’t get around to posting it until after the deadline.

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Credit Card Tips: Save Big Money with a 5-Minute Phone Call

Credit card companies keep raising fees and interest rates, because they are struggling to survive one of the worst economic climates in history. Every day the headlines describe how another credit card company cut back lines of credit or spending limits while it raised interest rates that were already out of control. But if you are a good customer who has not given your card company any legitimate reason to be hard on you – if you pay your bills on time and do not exceed your spending limits – then you may be able to successful turn things around in your favor. And all it takes for many cardholders is a polite and simple five minute phone call.

Call the card company customer service line, and politely but firmly explain to them that you have been a loyal customer and are satisfied with your card – except that you are able to get a much more attractive rate from another card company that has extended offers to you. Let them know that you will stay with their company only if you can justify doing so by getting a more reasonable rate, and ask them what they are willing to do for you.

If your current interest rate is 20 percent, for instance, you may want to ask for 15 percent instead. If your rate is 15 percent now you might try to get them to lower it to 10 or 12. Usually the customer service representative is already authorized to give you a small rate discount, as long as there are no problems with your account. They will often offer you a lower rate on the spot, and if they don’t you have nothing to lose.

But if your phone call only gets you from 20 percent to 18 percent, for example, you can pat yourself on the back. You just scored a whopping 10 percent discount and it only took five minutes. That’s a much better rate of return than most Wall Street wizards can boast.
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Credit Card Tips for eBay: Rack up more reward points on PayPal

So you are one of those millions of Americans who loves to shop on eBay, and you’ve noticed that within the past year or two almost every single merchant on eBay prefers PayPal payments. In fact, many – if not most – of the sellers on eBay only accept one form of payment, and if you don’t use PayPal then you cannot transact business with them. That’s not necessarily a bad thing, mind you, but PayPal accounts are generally tied directly to your checking account. You buy something, you pay for it on PayPal, and the money gets electronically deducted from your bank account to pay the seller. That’s great, and it’s really fast and convenient – but it does nothing to help you earn more rewards points on the credit cards that pay you in airline miles or other perks every time you choose to use plastic instead of cash.

Not to worry. You can still fuel your travel miles account while shopping on eBay and paying with PayPal. Here’s what you do: Once you get to your PayPal account, you will be presented with a page that shows you the details of your purchase, explains the shipping charges if there are any, and gives you a chance to double check and verify your shipping address and other pertinent details. But if you take time to study the page you will also notice that you have more than one choice for how you want to fund the transaction. The default or automatic setting is for it to take the money from you primary source of funds – which is usually going to be either your bank account or your special PayPal credit or debit card if you have one of those.

To use your purchase power to accumulate rewards on a special rewards card, however – such as an air miles card – you should list that particular card as your “back up source of funds” on PayPal. Then it will show up as one of the choices or sources of funds. Check that card – instead of automatically paying through your bank account – and it your charge will go on your designated rewards card. You’ll get your rewards points. You may not be entitled to special purchase protection plans from eBay or PayPal, so that is something you may want to consider. But chances are that your credit card company offers its own types of protection, so that may not be an issue after all.
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The Online Era of Credit Card Management

Not that long ago the whole idea of doing any financial transaction over the Internet was looked at with great skepticism and a bit of paranoia by the average consumer, but that has all changed. These days the online credit card account is a common resource for most people who can use online banking and Internet credit card tools to do everything from online credit card applications to bill payments and online credit card travel arrangements or shopping.

The only difference between traditional credit card use and online credit card management is that instead of dealing through the mail, over the phone, or in person at your bank you handle transactions and other procedures virtually – by using email or going to your online credit card company’s website. You can even get credit card offers through email, respond to them on your computer, fill out an online credit card application, and get a new credit card approved in your name – all with a few clicks of the computer mouse.

The big advantage of online credit card accounts and online banking is that you can access the account, pay bills, check your balance or statement, and do dozens of other tasks 24 hours a day, seven days a week, just by getting to a computer that has an Internet connection.

Once you establish an online credit card account you can schedule bill payment, for example, so even if you are traveling you can still pay your bills on time. You can schedule automatic payments for a future date of your choosing, and you can use your online account to manage your budget, your credit card rewards program, and even your year-end tax accounting. Nowadays you can even pay for things like your license plate registration renewal or real estate property taxes with an Internet credit card. Plus, doing this kind of activity and getting your online credit card statements sent to you electronically reduces the need for paper printouts, paper documents, and mailed statements – which is a greener solution that is better for the environment.
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What Does a Credit Card No Response to an Application Mean?

The first time getting a new credit card has become a really important rite of passage in the modern world of consumerism, because without a valid credit card it is much harder to transact business, shop, and enjoy the convenience of carrying plastic. But if you apply for a card and get a credit card no or a rejection of your application, don’t panic. Just because one card company turned you down it does not mean that other credit card companies will say no to you.

What companies look for on your credit card application is a track record of good borrowing and timely repayment of your debts. So first of all, lots of people who are applying for a credit card but have never had one before are faced with a challenge. Since they do not have a credit card they also do not have any credit history, and they me get a credit card no acceptance reply. In that case they should talk to their bank about ways to take out small loans, pay them back, make sure that the loan history is conveyed to credit card reporting agencies, and in that way gradually build up a paper trail of good borrowing and credit history.

Other reasons for credit card no acceptance answers from your application could be that you do not have enough income to adequately cover your debts. In that case you can reduce your debt by paying it off while trying to increase savings. Or you may get rejected because you or your spouse or ex-spouse has a bankruptcy or foreclosure on their credit record. In that case take some time to clean up your credit history, improve your credit score, and then try again.

If you meet with repeated credit card no-go answers each time you do a credit card application, you can still get an approved card, however, by using what is known as a secured card. You deposit money into a bank account attached to the card and the amount you keep on deposit determines your credit limit. Use the card responsibly to build a credit track record and then soon you will be able to apply for a conventional non-secured ordinary credit card.
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Understanding Your Credit Card Payment Options

Maybe you have noticed that once in a while, especially if you have been very good about making your credit card payment on time, you get a letter or note on your monthly credit balance statement that says you get a payment vacation. Some credit card companies offer these chances to skip a minimum payment, in other words, but before you accept the offer think about it for a minute because if you do not make the minimum payment you are still charged interest.

Making the minimum credit card payment just means you are keeping up with a portion of your interest payments, but by doing that you do not do anything to pay off the main balance of your debt. Only when you pay more than the minimum do your credit card payments cut down on your total outstanding balance – and only when you make a large enough credit card payment to pay off the entire balance do you stop getting charged interest.

Normally – unless you have a special card that lets you isolate certain purchases and pay them off separately – your card company will apply your credit card payments only to the total balance. So you may have a current outstanding balance, for example, of $300. If you buy something this month for $50 and pay for it at the end of the month by making a credit card payment of $50 your card company does not see it that way. In other words they don’t apply the $50 to that specific purchase but they just deduct it from the total you owe which is $300, plus the new $50 charge, plus any fees or interest you owe.

To really pay off your credit cards, therefore, you have to pay down the whole amount and clear the total outstanding balance back to zero. But keep in mind that there are some new cards being offered to those who have good credit and these cards offer financial management and budgeting tools that may let you pay off a designated purchase by itself – which gives you the flexibility to be more precise about how your credit card payment is applied. Some of these cards charge an annual fee but if you like that feature and option, you may want to look into getting one of these new cards.
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