Credit card management can lower debts further

The latest round of debt statistics from the Fed has shown the amount of people in the US who are failing to repay their credit card balances is falling.

While this is good news, the collective balance in the country still remains at $660 billion and many people use credit cards every day without giving it a second thought. Swiping the plastic is now as common an occurrence as handing over a few dollar bills.

However, as flexible as credit cards are, unlike cash, you could end up paying extra money just to use them and these charges are unwelcome at the best of times, especially when you are trying to budget and lower your expenditure.

With this in mind, Credit.com have issued some advice for people who are trying to cut their own balances further.

First of all, if you are paying an annual fee, think about switching to another provider. Obviously, you need to consider other factors - not least the annual interest rate - but there are plenty of free alternatives available these days.

Next its foreign transaction fees. Although most card providers will swap your dollars at a great exchange rate, the problem comes with the charge that they add on. If your provider adds on this three per cent fee then you should be very wary about running up debts while outside the US. 

Cash advance fees can be a major issue. You should avoid withdrawing cash from your credit card account whenever possible. Most suppliers have a cash advance fee of three per cent, but the minimum sum tacked on is usually $5 or $10. However, it is not just the upfront fee that you need to worry about as the card provider will usually charge these cash withdrawals at a much higher APR.

If you have money problems then you may be finding it hard to meet your existing repayments. Despite this, you should try to at least meet the minimum target to avoid late fees, which could inflate the total amount of money that you owe, making it harder for you in the future. You can set up automatic payments if your problem is simply a lack of organization. Some cards are available with no late fees, but be aware that interest will continue to mount and your late payment will still be reported to credit bureaus.

All the above are reasons to think about switching your credit card provider, but you need to ensure you are not stung by balance transfer fees when you do so. Even cards which feature a zero per cent grace period on your transfer may add a balance transfer fee of three per cent of your total sum.

Debt Legal's Jonathan Matthews has been helping people avoid these charges and get out of debt for more than ten years and he believes that careful account management can really make a difference.

He said "When you are trying to reduce a credit card balance and bring your finances in order, nothing should ever be considered too small or insignificant to make a difference."

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Jonathan Matthews has over ten years' experience working as a senior debt advisor for some of the most prominent debt management firms in Great Britain. He has helped many families get out of debt and now likes blogging his views and expertise to share the knowledge has gained over the years.