Attain Credit Card Nirvana In 20 Steps

Is your credit card debt bothering you? Ok, ok, I know it’s an understatement. Is your credit card debt killing you? Stop reading motivational speeches and try these steps.

Step 1 – Stop using cards

Bury your cards. And I mean it. Do not, at any cost, try to shop further with your credit card. You are already laden with heaps of debt. Why do you need more?

Step 2 – Pay low interest

Try to save some interest please. Get a card with lower interest rate and transfer your balance immediately. I know it’s next to impossible to get a new card with such a credit score, but aren’t you trying everything? Give it a shot. Be very cautious while applying for a new card. Ensure that it benefits your rather than adding to your debt.

Step 3 – Negotiate with your card provider

Ok. So you didn’t get a new card. Now what? Call up your card provider and tell them that other companies are offering you a lower interest rate but you want to stay loyal to their company. Try to convince them for a lower rate politely but quite firmly. Also, try to sound practical. You cannot ask them come down from 16% to 3%. 12% is fine. If they refuse to do so, try after a month or so.

Step 4 – Smaller debts first

It’s logical to pay the bigger debts first. However, if you triumph over your smaller debts, your psychological power can help you to get on with the bigger ones. Keep paying the minimum amount of your bigger debts and give whatever you have to repay the smaller ones.

Step 5 – Pay in parts

It doesn’t really require you to live a monk’s life for paying your minimums. Split the minimum amount in two halves and try to pay every two weeks. This wouldn’t complement you with the stress of continuous and bigger saving.

Step 6 – Budgeting

Keep a written track you what you are doing. Of course, financially. It’s very important to set a budget for your expenditures. Set a target of how much you will save every month or how much you will invest. If you don’t know where you are going, you will reach nowhere. So set a target first.

Step 7 – Debts first, food later

Debts first, food later. Ha! That’s an exaggeration.
Your target is not just paying the minimums every month. Keep paying whatever you can to get out of the debt. If getting out of debt seems quite a long destination and kills your motivation, think of it this way: the more you pay today the less you have to pay as interest tomorrow. If your gandma grants you some money, pay your debts. If you win in a casino, pay your debts.

Step 8 – Account closing

If you have paid off the balance of even one card, close the account. However, ensure that you close only the ones that are quite new. Keeping the older accounts open will improve your credit score as it brings the average age down.

Step 9 – Cash please

Trade in cash. This will make sure you don’t create another heap of debts for yourself. Don worry, it’s not necessary to carry cash with you always. There is another card known as ‘debit card’.

Step 10 – No more debts

There are companies that will offer you huge loan at low interest rates to repay your debts emerged from credit cards. Wow, that’s a great deal. Isn’t it? Not at all. Such loans require a security to process. Ok, let me put it simply for you. You just successfully secured an unsecured debt. That means, if you fail to pay back the loan, not only your credit score is wrecked, you lose your house, your car, and other belongings.

Step 11 – Debt Management

You can turn towards a debt management company or credit counselors. However, it’s very important to do a thorough research about the history and existence of the company. If someone has already dealt with the company, seek advice. While dealing with them, don’t forget to the conditions mentioned in fine prints.

Step 12 – One for each

Why do you want to make your life miserable by having 18 credit cards? Is it one for every day in a month? Keep it short and simple. Keep 1 card. Ok, may be you need to divide your personal and professional expenses. Get 2. Isn’t it simple remembering two due dates than eighteen?

Step 13 – Check your score

So now you are getting back on track gradually, know your score. This is a proper device to gauge your financial condition. However, it’s better to sign up for a monthly monitoring service rather than keeping a check on your score everyday.

Step 14 – Rectify Errors

Mistakes in your scores are more frequent than you assume. Scan the report for trivial errors, because even a minor one can cause a major effect on your score. And if you do find one, immediately contact the credit reporting agency to correct it. And remember, this is not a one time event. Keep checking regularly.

Step 15 – Old is Gold

Want to know a super secret to hike you credit score? Start paying the bills that you left unpaid 6 years ago or even older. Start clearing all the old dues and bills to witness a drastic improvement in your score. It may feel inane to call up and pay the bills after so many years, but don’t you remember what situation you are in and how frantically you want to improve? Oh, and it’s not important to explain them the reason why you are paying off the bill. Just tell them it’s a good deed.

Step 16 – No Settlement

There are chances that credit companies would offer you a settlement on your debts at a lower amount. One more good deal, isn’t it? No my friend. It may seem like a temporary relief from your burden, but it accounts to loss in the long run. It has a devastating effect on your score. C’mon, you have settled the debt at a lower amount that clearly means you don’t have money to pay them. How can you expect improved statistics to turn up? And these ruined numbers will just help you to get loans with higher interest rates, wherever you go.

Step 17 – Keep it low

Here is a simple way to show the credit agencies that you’re doing well financially. Use only 30% of the available balance on the card. Never exceed this limit. Now, if you have just one card and you can use only 30%, how will you survive? Read step 9 again, trade in cash.

Step 18 – Auto-pay

Remembering to pay all the bills is quite complex and you can easily miss some of them. However, you can’t afford to miss any, especially when you are trying hard to improve your score. So use automated services to pay the bill. Ask your bank to auto-pay some bills every month and don’t forget to regularly keep a check on your bank account balance to avoid some other charges like overdraft and late fees.

Step 19 – Oh my Score!

For some, credit scores are just figures. But you should not make this blunder. This score is a major factor affecting the interest rates of the loans that you might need in future. A few more points can save thousands of dollars.

Step 20 – Realization of Nirvana

What is the targeted credit score? I cannot suggest you 850, as it the uppermost limit and nearly impossible to reach. However, have a score greater than 775 is equally good for loan providers. You can negotiate the lowest interest rates on any kind of loans. You will get a job soon, and a partner as well. What else do you want? Isn’t it nirvana?