How To Consolidate Credit Card Debt

You are starting to get your credit card statements and the minimum monthly payments look like they are higher than you can manage. While you may not completely understand how you spent so much on your credit cards, you can consolidate your credit card debt, rely on your monthly income and pay your debt down. You need to set up a new budget and stop using credit in order to get on top of your obligations. Develop the resolve to stick to your new spending plan.

Step 1

Take every credit card you own out of your wallet, throw them in a deep bowl of water and freeze the water. According to The Motley Fool, making your credit cards hard to get to makes it much less likely that you'll actually put more debt on the cards.

Step 2

Buy items with cash or your debit card instead of your credit cards. Stick with this plan until your debt is paid down, then continue using cash instead of credit. Americans have an average of $10,700 in credit card debt, with an interest rate ranging from approximately 14 to 19 percent, according to Howard Dvorkin, founder of Consolidated Credit Counseling Services.

Step 3

Look through your credit card statements, find the credit card with the lowest interest rate and transfer existing balances from your higher-interest rate credit cards to this lower card. Ensure that your low interest rate is not a "teaser" rate that will shoot up in a few months. Pay the new minimum monthly payment plus an extra amount every month.

Step 4

Create a new and realistic monthly budget, including the new, higher balance you are paying on the low-interest rate card you transferred all of your credit card debt to. Cut out all unnecessary spending, including buying that expensive coffee every morning.

Step 5

Set new budget goals for yourself and your family. When you meet a goal, give yourself a reward. When you pay your debt down, make up a new budget in line with your new spending limits and don't go above this amount.

Tips and Warnings

If your monthly debt is more than you can realistically manage, get professional debt help. You can find honest, reputable debt consolidation agencies to help you consolidate your debt and help you learn to manage your monthly finances. Spread your holiday buying throughout the whole year and find sales opportunities so you can avoid putting yourself into debt again. Pay with cash, not credit.
Don't hire the services of a credit consolidation agency that promises to "eliminate debt fast" or expects payment before providing any services.