4 Steps to Eliminate Credit Card Debt

By Bradley Songer on September 20, 2010

Buying services and products on credit has become extremely common for the average person. It’s a lot easier to get caught up in swiping plastic without a worry instead of handing over actual cash to pay for your utilities. Thus, a plethora of people find themselves in debt and require answers to help out their financial situations.  It’s extremely wise to eliminate the credit card debt in your life. Start now on the road to recovery and becoming debt free.

Completely stop using credit cards. Most people keep living beyond their means and their credit card debt exponentially increases. You’ll find yourself barely being able to pay off the interest, let alone the actual deposit. If you are in credit card debt, continuing using your credit cards can only make your life worse in the long term.

Create a budget which lists all of your mandatory expenses and unnecessary luxuries. You’ll find that a lot of money can be saved on a monthly basis by just eliminating excess spending on unnecessary goods. Things like buying extra movie channels, extra ice cream or cakes and expensive clothing are some just examples of numerous items that you can remove from your life to help pay off your debt. Try to only spend money on your ‘needs’ such as mortgage or rent, utilities, food and other miscellaneous bills.

A lot of people forget the value of money when they hand over their credit card and it is returned to them a few moments later. People don’t assign the same value to credit cards as they do to money. By using cash, allowing your money to be given away and not returned, you can better assess the value of your spending. By doing this, it makes you think twice before buying luxury goods.

 

This step has two real methods to achieving success. If you have a lot of debt spread out on multiple credit cards, try to transfer all of the balances of all of your cards to either lower interest rate cards or a 0% APR credit card. Even though the introductory rate only has a certain allocation of time: usually 6-12 months, this time can be used to massively decrease debt instead of increasing debt. If you cannot receive a 0% APR credit card, try to transfer your highest-interest credit card bills to your lowest interest rate cards. Make paying off your highest-interest rate credit cards a main priority.

The second method is to renegotiate terms with your creditor. If you threaten bankruptcy to the creditor, they will usually respond by renegotiating your interest rates. They want to protect themselves from a possible loss. It’s possible to achieve a lower repayment schedule and a lower interest rate by this method.

Most people only pay the minimum balance required each month for their credit card bill. This is extremely unwise. This only prolongs the amount of time it takes to pay off your debt; in actuality, it increases your long term debt. Try paying off your debt as quickly as possible. If applicable, take the cash out of your savings/investments/401(k)/etc. to pay off your debt. In the short time this may seem incorrect, but the money you save from not having to pay outstanding interest rates will save you money in the long term. The longer you take to repay charges, the more interest credit card companies make, and the less money you have long term. Thus, try to pay as much as you possibly can against your credit card every month.