Three Ways to Get a Handle on Credit Card Debt

Credit cards are a wonderful convenience because they offer us the freedom to buy something now and pay for it later. Unfortunately, many people use them to buy more than they can actually afford, and before they realize it, all the different purchases have snowballed into a massive amount of debt. If you are one of the many people trapped under a mountain of credit card debt, don’t panic. There are several simple things you can do to get a better handle on and eventually overcome your credit card debt.

Step 1: Immediately curb your credit card spending. Once you recognize that your credit card debt is out of control, it would not be wise to continue adding to the problem by making additional charges. Instead, you need to firmly resolve to not use your card(s) again—except in case of a real emergency—until you have paid off your balance(s) completely or until you have reduced it to a predetermined amount. Alternatively, if you don’t want to sacrifice the convenience of paying for things by credit card, then you will need to commit yourself to paying off all of your new purchases each month so that your credit card balance does not continue to increase.

Step 2: Increase your monthly payments. One of the best ways to decrease your credit card debt more rapidly is to increase, if you can, the amount you pay towards your credit card bill each month. The ideal situation would be to not carry over any balance at all, but if you’re overly burdened with credit card debt, that probably isn’t a viable option. Paying only the minimum payment is what often lands many people in debt trouble. Not only will it stretch your payments out over many years, if not decades, it will also mean that you’ll end up paying hundreds and hundreds of dollars extra in interest. Whenever possible, put in some extra money along with what you’re already paying. Even if you can pay only $20 extra each month, it can go a long way in reducing the total amount of interest that you end up paying.

Step 3: Contact your creditors. If after developing your budget, you find that you simply do not have enough income to cover your monthly living expenses and all of your debt payment obligations, then you should consider contacting your creditors immediately. Tell them why things are difficult for you, and try to work out some type of modified payment plan that reduces your payments to a more manageable level. Creditors understand that if you file bankruptcy, they may get little, if any, of what you owe them, so most of them will be willing to work with you. They may agree to lower the interest rate that you’re paying, the minimum monthly payment, or both! Sometimes they will even forgive a portion of your debt. Don’t wait until your accounts have been turned over to a collection agency. When that happens, your credit will be hurt even more.

There are, of course, other effective steps you can take to gain control of your credit card debt, but any remedy must begin with you first acknowledging that the debt is a problem and then committing yourself to a serious course of action to address it. Credit card debt is something many people all over the country are facing right now, so you’re certainly not alone! For most people, getting rid of this debt will not happen overnight, but if you develop a sensible plan and stick to it, you can start reducing your debt steadily and surely.

Copyright © 2009   Art Garmon, Ph.D.   All Rights Reserved.