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Eliminating Your Credit Card Debt
By David Pilley on September 16, 2010

MP900432902-(1).jpgLet’s face it. The phrase “eliminating your credit card debt” is merely a case of semantics. Any website that says it can eliminate your debt or can make it disappear in minutes is lying, and you could get in legal trouble (or more debt) if you get services from these companies. The only surefire way to immediately eliminate your debt is to pay off the balance. If you can do that, then you don’t need any more paragraphs. However, it’s highly likely you can’t pay it all off in one lump sum. There are a few different actions you can take to gradually eliminate your credit card debt.

First, you need to collect all of your credit cards. Make sure you know the current balance on each card, and also note the different interest rates if your debt continues to grow.

To deactivate or not to deactivate? That’s a good question. If you have a credit card you haven’t used in a while, you should consider getting rid of it to avoiding tacking on additional debt. Just remember to first pay off the existing balance. When you close an account, though, you lose its credit history. Therefore, you could do some damage to your credit score if the cancelled card had a low balance or fewer late payments than your other cards.

To lower the amount of growing debt, you need to make a lifestyle change. Live below your means for a little while and try to eliminate excess spending so you can save a little more. One of the best every-day things you can do is purchase generic brand food items instead of brand-named goods. Generic brands cost much less than brand names, and the majority of generic foods have the same ingredients as their brand-named equivalents, so you won’t even notice a discernable difference. (If you don’t believe me, check the labels for nutritional facts.)

In paying off your balance, you have some choices. You can either start by paying off the card with the smallest balance or the card with the highest interest rate. Paying off the smallest balance first can build your confidence in tackling your other cards, while paying off the account with the highest interest rate will lessen the amount of new debt you’re getting. It helps if you can pay off the smallest balance in one lump sum, but if you can’t do that, you should focus on the card with the highest balance or interest rate. (Consider yourself lucky if the credit card with the smallest balance also has the highest interest rate.) And if it’s going to take a few months to pay off a specific balance, make sure you can pay more than the minimum monthly payment to lessen the total amount of interest you are paying.

If you’re not very good with multitasking, you should consider consolidating all of your accounts into one existing account. That way, you can keep track of one number and not feel overwhelmed with so many different payments. Remember that you can’t eliminate your debt instantly. It takes time and perseverance, but if you are patient, you can eliminate your debt legally.
Note: If you have tried unsuccessfully to eliminate your credit card balances on your own, you may wish to consider options to reduce your interest rates and lower your payments. In some circumstances, you may be able to earn a lower interest rate by overpaying on an account. If your creditor refuses your request, you may still be eligible for an interest rate reduction through credit counseling.
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