How to Manage and Eliminate Credit Card Debt

| November 25, 2012
Eliminate Credit Card Debt

Eliminate Credit Card Debt

In the current economic climate it can be extremely harmful for a person’s financial situation to have a substantial amount of their income consumed by credit card payments every month. But how can you improve your credit card debt management on your way to eliminating debt owed to credit card companies?
Here are four simple but effective steps to take to become credit card debt free.

(1) Reduce Your Credit Card Spending and Negotiate with Your Credit Card Provider

First of all, a basic move many struggle to make, reduce your credit card spending. If you can, avoid credit card purchases altogether and don’t rely on your credit card to get you out of tight financial spots. Try to set aside a small emergency pool of cash instead. At first you may find it difficult, but adding to your credit card debt is the worst thing you can do. Also contact the credit card providers and try to negotiate an interest rate reduction, especially those with the highest rates. Explain your commitment to paying off your credit card debts and you may be surprised by how many agree to reduce their interest rates.

(2) Consider Credit Card Balance Transfer Offers

Many credit cards hold promotions offering lower interest rates if you transfer your balance to their financial product. Be sure to read the small print, but consider all balance transfer options open to you. Contact them directly and discuss how the balance transfer could benefit you, making sure you give a clear account of your current financial situation. However, be aware that promotional periods of lower interest rates often have a pay off date, so devise a repayment strategy to clear it before the allotted time comes round.

(3) Organise Your Payments to Clear the Highest Interest Rate Credit Cards First

Sort your credit card debts, if you have more than one, into a clear order according to the rates of interest. Naturally, you should always pay the minimum amount necessary on each credit card, but make extra payments on the credit cards with the highest interest rates first. Remember to try to negotiate an interest rate reduction with your credit card provider first, as this will help you manage your debt payments more easily.

(4) Devise a Credit Card Payment Schedule and Keep to It

Set out a structured credit card debt payment plan, organised around the monthly payment dates for your credit cards and adjust your spending to ensure you have enough set aside each month to cover them. Track your progress and identify ways to free up more cash each month to make extra payments. It is vital that you set clear debt payment goals and keep to them. Taking credit card debt payments step by step, with the goal of reaching a zero balance for each of your cards, will help you identify the most effective ways to reduce your overall monthly spending. Reaching self set milestones will also give you a continuous sense of achievement, which can be a powerful force that drives you forward towards becoming debt free.

Author Bio:
James McDonnel contributes to a number of online publications including Next Financial Group and Your Finance Info. When he’s not discussing business, he likes to unwind with a game of golf and his family.

How to Manage and Eliminate Credit Card Debt

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