How To Get Rid Of Credit Card Debt

How To Get Rid Of Credit Card Debt? Good question, here are five things you can do to get rid of your credit card debt ...

When you are looking at that stack of bills in front of you and suddenly are overwhelmed by the extent of the debt you have run up, your first thought is probably to go out and buy a paper shredder. That’s the easiest way to get rid of the bills, but it won’t do a thing for your debt. Those bills will just come back again next month and the month after that, so you might as well do something about it now before it gets any worse.

1. Sort Your Bills!

The first thing you should do is sort your bills by categories. At the moment you are only concerned with your credit card debt. If you want to really figure out how to get rid of credit card debt you first need to know exactly what you owe. Ok, now that you have your credit card bills set aside take a look at your living expenses. That would include things like rent/mortgage, insurance, utilities, automobile, groceries, child care and anything else you need for everyday life. Take those expenses and start a budget.

2. Budget!

Budgeting is one of the most important steps you’ll take so pay careful attention to every last detail. You may not have an accurate budget for at least a couple of months of trial and error, but you really need to focus on making a budget that works and sticking to it. Make sure that you plan for every contingency because any income that is not absolutely necessary for daily living is going to be used to pay off some of that outstanding credit card debt.

3. Get Lower Interest Rates Wherever Possible!

Once you know how much money you have above and beyond your living expenses you can finally start to think about lowering your credit card debt. This is probably the second most important step you will need to take so pay very careful attention to those credit card bills you have in front of you. Sort them out by how much interest you pay. If there are any bills that carry an interest rate of more than 15%, lay them aside so that you can call the lender. Your goal is going to be to try to talk the lender into lowering your rate. Many lenders are open to negotiating rates if you have a good payment history with them. They want to keep your from going over to the competition so they just might be open to negotiating rates. Those credit card companies who won’t work with you can be dealt with later.

4. Pay Off And Close Out High Interest Credit Cards!

Now you probably have the lowest rates you are going to be able to get so figure those payments into your budget. It’s time now to deal with the credit card companies that wouldn’t reduce your rates. The only thing you can do with those bills is to get rid of them altogether. You can either transfer outstanding balances on them to other cards or you may need to get a debt consolidation loan to pay them off. In either case, the point is to close out those accounts that carry high interest. Paying high interest rates will keep you in debt that much longer.

5. Pay Off And Close Out Cards With The Smallest Balances!

Any money that is left over beyond what is necessary to stay within your budget should be spent to pay down outstanding credit cards. It has been suggested by experts in the field that you pay off the smallest credit card bills first and get rid of those cards. Tear them up, burn them, shred them, do whatever it takes so that you won’t be tempted to start using them again.

As bills get paid off you will start accumulating money. Don’t spend it! At this point it is better to put that money into a high yield account somewhere where it can continue to grow. Once you’ve mastered how to get rid of credit card debt it’s important to stay out of debt. Only keep one or two of your credit cards that carry the lowest interest rates and close out the rest. It may take a while, but you can get a handle on your credit card debt if you plan wisely and stick to your plan.