7 Secrets Credit Card Companies Don't Want You to Know

Credit card debt is at an all-time high, yet consumer confidence in their ability to reduce debt is at an all-time low. To avoid bankruptcy, consumers need effective ways to reduce debt, especially to reduce credit card debt. These seven some simple solutions can help reduce credit card debt. Simply knowing these secrets may help people to reduce debt and avoid bankruptcy.

1. Study the fine print to reduce debt. Many times, credit card companies entice people to get cards because of low interest rates. What many don't realize is that these low balances are usually just introductory. While someone may think they can reduce debt by transferring the balance to a new card, they may in fact be doing the opposite, depending on what the interest rate is after the initial period. When you have a card with more than one interest rate (limited time offers or balance transfers), payments made will be applied to the lowest interest rate, while interest gets compounded on the higher interest rate.

2. Understand rolling balances to avoid bankruptcy: If balances are not paid in full each month, the amount is carried over, and any new purchases that month get interest accrued from the date of purchase. You do not get a 30-day grace period on your new purchases. A good goal to aim for is to try to pay the balance off completely each month.

3. Knowing the terms can help reduce debt. Your terms, such as interest rates, can change at any time for any reason, affecting current balances in the process. If you happen to make a late payment, for any reason, they can change the terms of the agreement. This can be detrimental to someone who is on the path of trying to reduce debt and avoid bankruptcy.

4. Know the legal rights to reduce credit card debt. The credit card companies do have the legal right to review your credit report at any time. They will be able to see if the consumer is trying to reduce debt with other creditors. Since they have access to someone's credit report, they could ultimately use some of that information against the person.

5. Universal default: The credit card companies can raise your interest rates at any time, simply because they check your credit report and see something they don't like. They are basically saying, "We have the full right to raise our rates if the customer might not repay us." Some credit card companies may charge up to 29 percent. Not keeping current on all credit cards can be used against you, even with cards you are keeping current on.

6. Beware of cancellation policies. Your credit limit can be reduced or your account canceled at any time, with no warning. Just like you have the access necessary to reduce or close your account at any time to reduce debt, they can also terminate your right to use a card.

7. Reduce debt and avoid bankruptcy with fewer cards. Keeping the number of cards you have to a minimum is ideal. It's better to have fewer cards with higher limits than it is to have many cards with low limits. The credit card issuer would like you to have ten of their cards, each with a $1,000 limit so they can assess each card with fees. Having just one to two cards with a limit of $10,000 each is ideal. Try to aim for not having more than two cards.

Trying to reduce debt, especially seeking to reduce credit card debt, and avoiding bankruptcy is entirely possible, even in this tough economy. However, consumers will need to have a clear understanding of how their credit cards work. If they don't understand the fine print and how the system works, they are not likely to reduce credit card debt. To avoid bankruptcy and reduce debt, consumers need to keep these tips in mind and put them into action.