Reducing Credit Card Debt

Reducing credit card debt and paying it off is a big part of being financially healthy, but it is not the only thing that you need to do. If you listen to financial experts, in years past they were all about paying your debt off as quickly as possible. With the change in the economy, the advice being given by these individuals has also changed. This is like many things in our lives. We have to make changes that will allow us to stay up with the current trends.

One of the biggest changes in trends is the reluctance on the part of lenders to lend money. If you want to borrow money, you have to have a credit score that shows that you are worthy of borrowing money. It used to be lenders would lend money relatively freely. If your credit score was on the low end, as long as you were willing to pay a higher interest rate you could usually find someone that would be willing to lend you money. That is not the case anymore.

Credit card companies and mortgage companies have become much more cautious about who they lend their money too. Many credit card companies have reduced the credit limits, raised the interest rates and even closed the accounts of some of their account holders. The bottom line is if you are relying on your available credit card balance to be your emergency fund, you should rethink that plan. There is no guarantee that the available balance or your account will be there when you need it.

Building an emergency fund should be something you should be doing right along with paying off your debt. You would be better off making only minimum payments on your credit cards until you get enough money in the bank to at least handle any minor emergencies. Even if you do have the amount of an emergency expense available on your credit card, it will keep you from having to charge expenses. This will keep your credit card balance headed in the right direction…down.

Although paying off your credit card debt should be a priority, you can do other things to improve your financial security during this same period of time. Having a minimum of $1,000 in an account that is easily accessible is something that is equally as important as working towards debt freedom. Get a plan setup for debt reduction and at the same time figure out how much money you can put towards your emergency fund each month. Once your emergency account is sufficiently funded, then go full force towards paying off your debt. Consider debt help services for information on becoming debt free and building and emergency fund.