How to Eliminate Credit Card Debt

Paying down your credit card balance in full each month is the best method to stay out of debt. But if your like many of us, you need to carry a monthly balance to pay for basic living expenses and emergency's. Here a couple of tips that anyone can use to help get out of debt. It's not the fastest way, but it works.

Instructions

Difficulty: Moderate

1. Accelerated Repayment - Instead of just paying down the minimum balance, pay as much as you can. Interests rates are what keep most people in debt and the credit company's bet on you only paying the minimum. This is how they make money.
2. Debt Consolidation - Pay off your credit card debt by consolidating all your cards balances into one lump sum. You can do this by refinancing a mortgage - either a first, second, or line of credit and use the funds to pay off your credit cards. This will save on any interests costs you would potentially owe to creditors. Just make sure not to miss a mortgage payment or you could lose your home, which is a lot worse than missing a credit card payment. You will also need to have a good credit history in order to qualify for a loan.
3. Credit Counseling - Another option is to speak with a third party Consumer Credit Counseling Service (CCCS) and determine if you qualify for a debt management plan. With this service you only have to make one monthly payment to the counseling service and they disburse to your credit card company's. The counseling service may also work with your creditors to reduce your interest rate and eliminate fee's. Keep in mind that using this service may affect your credit rating and make sure to find a reputable company.
4. Debt Negotiation - Also known as "Debt Settlement", in these programs you typically save money into a trust account, and once you have saved enough the company you are working with will negotiate with your creditors for a reduction in what you owe. This method is a faster way to eliminate credit card debt in relation to debt management, plus you are actually reducing the principal amount of what you owe, and not just the interest rate. Before enrolling make sure you understand the impact that a debt negotiation program will have on your credit, and any other risks involved.
5. Bankruptcy - If you have no other option and your really deep in the hole your only choice may be to declare bankruptcy. In a traditional Chapter 7 bankruptcy filing you may be able to eliminate credit card debt completely, depending on your situation. Before considering this step, you must consult with an attorney who will tell you whether you even qualify, as recent laws have made it more difficult for consumers to file a Chapter 7 to eliminate credit card debt. Your attorney should also explain to you the negatives associated with personal bankruptcy, such the severe, public, and long term negative impact on your credit report.

Tips & Warnings

• Pay more than the minimum balance do every month
• If possible pay off your balances in full every month
• Exhibit self control when using credit cards
• Don't spend beyond your means