Kim's Hard Time Tuesdays: Credit cards

ALBUQUERQUE (KRQE) - The average person in the United States has $8,000-$9,000 of credit card debt with many struggling to reduce those balances.

If you find yourself in a never ending battle to pay down that debt there are simple steps that can make your life easier. If you are a good manager of your credit there are ways you can make your companies pay you to use the card.

1. Reduce your rate

Ask your credit card company to reduce your interest rate. If you are a good customer who pays on time then your company will usually do it. If you are turned down by the first operator you talk to, ask to talk to a supervisor. Reporter Kim Vallez tried and got her company to reduce my rate by 3 percent.

2. Negotiate.

If you are too far in a hole to dig yourself out, negotiate with the companies to pay back the debt whether it is a credit card company or collection agency. Many will work with you. The first step is making a phone call to the company and writing a letter explaining your circumstances.

(Credit specialist Michael Ramos of the non-profit organization Credit Rescue Now said many companies will work out a plan where you pay no interest, no penalties and 75 percent of the balance. Ramos says it enough help to allow many people to catch up and avoid having to file for bankruptcy. Ramos does advises against consolidation loans unless absolutely necessary. He says those ruin your credit score and make it tough for people to build up their credit again.)

3. Take advantage of the perks.

If you are a person with good credit and in good control of your credit, you can get companies to pay you to use their card. Some companies like Chase offer you cash back on the items you buy the most. Rates vary from 1 to 5 percent. With Chase Rewards you can redeem your rewards for services, products like gift cards, or for cash. If you wait until your cash back bonus is at $200, Chase will automatically bump up your reward to $250. Other cards like Discover offer 5 percent cash back on different things every three months. If you fly often cards that offer you free airline miles would be a good option.

4. Improving your credit score is key.

Ramos said a score of 720 or above is what is needed these days to make absolutely sure you can get a loan. A score of 600 used to be considered a sufficient score. Ramos says there are steps you can take to improve your credit score.

• Check for errors on your credit report and correct them.
• Never make late payments. One late payment could cut your score by 35 points.
• Don't allow your balance to reach more than 50 percent of your limit. Part of your score is based on balance verses limit, the larger the gap the better your score. Helping maintain this gap may require you to keep some credit cards open that you don't use very often. If you do this, use your card about once a month so that the company doesn't cancel it.
• Keep your older cards. Your length of history is a big factor in your score. If you do need to cancel cards, make sure and cancel the newer ones.