Taking These Steps Can Reduce Your Credit Card Debt Efficiently

Step 1: Find yourself a platform that can negotiate lower interest rates

In general, it is recommended that you should try to negotiate your debt by calling your creditor.

People often never call their creditors to even ask for lower rates. As a result, it makes it harder to eliminate the debt and leads to higher costs.

There are also more innovative platforms that embraces the responsibility of cutting costs on their users’ behalf. Ubund is one such platform that can help you if you think that you’re paying an unreasonable fee to a provider whose service you nonetheless don’t want to cancel. In this case, you can still hold on to your service and let a third-party cost-cutter organization negotiate a deal that won’t hurt your budget.

While you should review every such organization’s website as well as check out their reputation on social media to make sure that their offerings are legitimate. Some cost-cutting organizations can downgrade your plans without telling you about it and ask to get rewarded with a certain percentage of the “saving” that they can achieved for you.

I personally enjoyed Ubund because their website offered a cool deal on Netflix that made the price of a premium membership come down to a little less than the medium plan. While I wasn’t necessarily a customer of online TV streaming services, I saw a lot of value in the 30% discount offer and I simply did not want to miss it.

When I signed up for this deal, I also saw that this organization does cost-cutting and debt renegotiation for frugal consumers who want to enjoy a variety of services but do not want to extend their budgets. I think this and similar other organizations can be quite useful for them.

However, if you want to go the traditional way of doing cost-cutting, the process is this:

1. Check the current interest rate on every credit card that you use
2. Write down the important facts about your credit:
3. Length of time you’ve been a customer for each account
4. How long you’ve gone without missing a payment
5. How much your credit score has improved since you opened the account

3. Check current credit card interest rates to know national average rates for each type of credit card you hold.

After that, you can call the customer service department and request a rate reduction. When you talk to a supervisor who has the authority to change your rates, you may find these tips helpful to negotiate lower interest rates effectively.

Step 2: Make your debts your priority

After you lower your debts, you should organize. Start from paying down your debt with the highest ARP and proceed to the lowest.

That way you will get rid of the biggest chunks of your debt expenses first, increasing more space in your budget as you start to pay less on total interest charges.

Step 3: Keep your diet until you get more cash

You want to grow your cash. You can’t do that by just paying down your debt. You also need to cut your unnecessary expenditure.

Think of it like a diet that you shouldn’t break as you are trying to lose all your extra financial burden.

The point is to maximize your free cash flow, the money that you are left with after you pay your bills and additional necessary expenses.

As you grow enough cash in hand, you can pay down your debt more quickly. The faster you reduce your debt, the lower are the interest charges that applied to your debt as well, which means you are saving money.

Once you pay down all the debt, then you can break your diet. You can continue to support your previous lifestyle.

The more cash flow you have available to reduce debt, the faster this goes. Faster also means fewer interest charges applied to your debt, so it saves you money, too.

It’s worth losing a few discretionary expenses for a short time to these high interest rate debts paid off fast.

Step 4: Focus maximum effort on your biggest debt first, minimum for the others.

You should focus on knocking out your credit card debt with the highest ARP.

Don’t make the mistake of dividing your money toward paying multiple debts at once. This is not cost-efficient.

Instead, it’s more effective to focus on just one debt. Make the minimum required payment on all the other credit cards. For the credit card with the highest ARP, however, use all of your cash and make the largest payment.

Keep doing that each month until your balance on that card hits $0.

Step 5: Knock all the rest, one by one

Use the same strategy for your other credit cards. Make sure that you always hit the credit card with the biggest ARP and move down to the next once you’re done with it.

By the time you have shaved off a decent amount, you can start eating a bit more junk food, meaning you can add back some of your unnecessary expenses back again.

This helps you paying down debt more bearable. We all need to spend money on things that we enjoy and not doing for a long time can be hard.

While you should absolutely cut all your unnecessary expenses at first, you can slowly start adding them back to your budget to avoid overspending due to burning out.

This is where Ubund can make a difference in your life. While you are paying your debt, Ubund can help you maintain some of your non-credit card related expenses, such as your monthly membership to your internet provider by negotiating for a cheaper rate.

At this point, you should think about saving. Once you pay off your credit cards, you are going to have more additional free money left on your monthly budget.

Set up a monthly recurring transfer to savings. For example, if you save $300 every month, then you can save $150. Boom. You start generating an emergency fund.

Whenever you are paying your debt, always ask yourself:

1. Is this the fastest way to repay what I owe?
2. Is this the most cost-effective way to reduce my debt?

If there’s a faster, cheaper way to pay off what you owe, then you should do it.