CNN Money reports that the average household in the U.S. has at least one credit card--and almost $11,000 in credit card debt, a particularly bad type of debt due to high interest rates carried on the balance. If you want to get out from under credit card debt, you must change your pattern of charging as well as devise a plan of action to repay creditors without incurring long-term damage to your credit history. It's important to "put your cards on ice" while implementing a strategy to pay off credit card debt, cautions the financial experts at Credit.com. Continuing to charge while paying down debt is counterproductive.
Step 1
Never charge things that you don't need and cannot pay for, such as vacations and restaurant meals. The only exception is if you can afford to pay off the entire balance within two months. Otherwise, use cash. If you want to make an expensive purchase, such as for a trip or a HD television, save the money first and then make the purchase.
Step 2
Make a budget. This way you can see where your money is going and find out how much credit card debt you're paying off each month. Credit.com advises adding up the amounts of the minimum payments of all of your accounts to see if you can afford to put more toward one or two of the debts. If you can, you're in an optimal situation to get out from under credit card debt.
Step 3
Pay off the credit card with the highest annual percentage rate (APR) first. Double or triple your monthly payment amounts, if possible. Stick with the increased amount of payment even as you see your balance approaching zero. If you resort to making minimal payments again, you're slowing your progress. Continue making minimum payments on all other credit card balances. After you've paid off the credit card with the highest APR, move on to the credit card with the second-highest APR and use the same strategy.
Step 4
Alternately, pay off the credit card with the lowest balance first. Credit.com notes that this is a good way to "build momentum" in getting credit card debt paid off. Continue to make minimum payments to all other accounts. Once you pay off the card with the lowest balance, move on to the card with the next-lowest balance and repeat the process.
Step 5
Reach out for help if you need it. A credit counseling agency that's a member of the National Foundation for Credit Counseling offers you the services of a certified credit counselor who will look over your credit card debt and make suggestions appropriate to your situation. This is better than risking credit card debt going into arrears or charged off by the creditor and handed over to a collection agency, which will have a negative effect on your credit rating.
Tips and Warnings
- Another way to get out from under credit card debt quickly is to increase your income by getting a second job, advises the NFCC. While this may not be particularly desirable, it's much better than getting calls and letters from collectors. While you're paying off credit card debt, use cash, a check or a debit card instead.
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