How to Get Rid of Credit Card Debt

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By temari
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Get Rid of Credit Card Debt

Credit card balances spiraling out of control? Afraid you're never going to pay off your plastic? Read on for tips on how to reduce your debt and pay credit cards off faster.

Difficulty: Moderately Easy

Instructions

Step 1

Call the customer service number of all credit cards you currently carry a balance on and ask for a lower interest rate. If you have paid your bills on time, most will give you a break. The less you pay in interest, the more of your money goes to paying off credit card balances.
Step 2

Stop using credit cards. Yes, I know. For the truly addicted, easier said than done, but leaving your credit cards at home will help curb impulse buying. It's difficult to add to those balances if you no longer carry your credit cards with you. If you absolutely must use a credit card (for instance, on-line purchases), buy a gift card to use instead or use a prepaid card purchased specifically for those needs.
Step 3

Make a list of all of your credit cards, each's balance and their interest rates. Target credit cards that have the lowest balance first. Higher balance cards may have lower interest rates, but you'll gain a sense of satisfaction and achievement by paying off those lower balance cards first. Send every extra dollar to the lowest balance card on your list and keep doing so until it is completely paid off.
Step 4

Don't have extra money to send along with those minimum payments? Sure, you do. Do you buy coffee on your way to work every morning? Stop. Put that money in a jar every morning instead and send it along with your minimum payment. Or get rid of a premium movie channel. Or eat out one less night per month. Choose a minor luxury you can live without and apply the money you save to your credit card balances.
Step 5

While higher paying balance credit cards are waiting to be targeted, round your minimum payments up. If your minimum payment is $41, send $45. We can't send an extra $50 every month, but I'll bet you can send an extra $2 or $3. Every extra dollar you send goes directly to the balance. That's $2 or $3 you won't be paying interest on next month.
Step 6

Once you've paid a low balance credit card off, call the company to cancel that account. After, reward yourself with a small party to destroy that credit card. There is a great deal of satisfaction in cutting that credit card into teeny tiny bits and otherwise annihilating it. Fun, huh?

Remember that minor luxury you gave up? Now's the time to treat yourself. If you gave up your morning coffee, reward yourself with a cup. Gave up a premium movie channel? Rent one of the movies you missed. Take your family out for lunch. (Lunch is cheaper.) This is your time to celebrate your achievement.

Next month, climb back on that horse. Roll the payment you had been sending to the next credit card on your list.
Step 7

Consider a debt consolidation loan, but only if you are serious about weaning yourself from the credit card habit. Investigate interest rates by several different banks and companies to see how much you can truly save by consolidating. If you decide to consolidate, cancel all your credit card accounts and destroy those cards immediately.