How to Get Rid of Credit Card Debt for Good

High credit card balances are stressful. Even if you pay off the credit card balance, it's possible for you to incur large amounts of debt again, especially if you haven't addressed the behavior behind the debt. According to the Federal Trade Commission, taking steps such as creating a budget, seeking credit counseling and looking into debt-management programs can help you get rid of credit card debt for good.

Instructions

1. Create a budget. According to the FTC, the first step in getting a handle on credit card debt is creating a realistic budget. List all monthly expenses. Then list income. Allocate any money left over to paying off credit card debt.

2. Cut costs. Review each category of spending for opportunities to save money. For example, if you have started carpooling to work or taking the bus instead of driving a few times a week, you will be able to spend less on transportation. Take the money saved and apply it to your credit card debt.

3. Contact your creditors. If you have accounts that are in default, work out a payment arrangement with your creditors. The company may be able to modify payments to make paying back debt more manageable.

4. Change behaviors that have contributed to your credit card debt. For example, if you struggle with so-called "impulse" buys, freeze your credit card. If you really want to purchase something outside of your budget, you'll have to wait for the cards to thaw.

5. If you're feeling overwhelmed with credit card debt, consider getting credit counseling. This service is available at credit unions, universities and military bases. Credit-counseling services help consumers put together a plan to pay off credit cards for good.

6. Check out debt-management plans (DMPs). With these plans, the consumer and counselor determine a repayment program. The consumer will make monthly deposits to the DMP and the program will pay the creditors, helping the consumer be more accountable. Contact your local housing authority to find reputable programs in your area.

Tips & Warnings

• Avoid making late credit card payments. These can increase your interest rate and drive up the amount of money paid on interest each month (instead of paying down principal).

• When finding a DMP, don't pay up-front fees. The program should evaluate your credit file, negotiate repayment with your credit card companies and than collect a modest fee.

References

• FTC: Knee Deep in Debt
• Fool.com: 9 Ways to Pay Off Debt