How do I Manage High Credit Card Debt?

Managing credit card debt requires planning and self-discipline.

High credit card debt can be a serious drain on a personal budget. Because interest rates for credit cards are far higher than most loans or mortgages, credit card debt is the first debt that a person seeking to gain control of his or her finances should tackle. By simultaneously reducing the debt and reducing the spending that leads to more debt, you can slowly begin to manage your finances more effectively and regain control of your financial life.

Things You'll Need

• Credit card
• Bank account

Instructions

Consolidate Your Credit Cards

1. Borrow enough money on one credit card to pay off the debt on all of your other credit cards. Managing one card is psychologically far easier than managing multiple cards. Getting rid of a lot of credit cards at once will have a negative effect on your credit rating, so you may be better off keeping them but not using them, according to FICO. If the temptation is too strong, have a family member or good friend hide them somewhere.

2. Keep track every month of how much you owe on your one remaining credit card, and what percentage of your payments are going toward interest. Keeping this number foremost in your mind will help you to remain motivated to pay off the debt.

3. Double your minimum payment on your credit card debt. By forcing yourself to come up with more money every month, you will learn that you can do it when you have to, and you will dramatically reduce the amount of interest that you end up paying on your debt.

4. Avoid the temptation to acquire any more credit cards, no matter how many offers you may get or how attractive the terms may sound. Remember that credit card companies are not charities; they make their money because so many people are paying such high interest rates on their debts.

Develop Inexpensive Habits

1. Get involved in activities that cost little or nothing. Simply denying yourself things usually doesn't work; you need to take a positive approach rather than a negative one. Keeping yourself occupied with inexpensive activities will help you to avoid the expensive ones, such as excessive shopping or travel.

2. Replace a credit card with a library card and use it. Go out hiking with friends. Volunteer with a charity. Take up a hobby you can do at home, such as painting or writing. All of these things are free, and will free up money that can go toward your credit card debt.

3. Invite friends over to your home for a potluck rather than going out with them to expensive restaurants. The socializing is just as good, at a fraction of the price.

References

• Federal Trade Commission: Knee Deep In Debt
• Money Instructor: Credit And Debt Management
• My Fico: What's The Best Way To Manage My Growing Credit Card Debt?