How to Deal With Too Much Credit Card Debt

holding a credit card

Having too much credit card debt can make you feel as if you are drowning. Every time you take a small step forward, you may feel like you take two giant steps back. Credit card interest can do that to you. Just making the minimum payments on your mortgage won’t get you very far. In fact, your credit card statement likely tells you just how long it will take to pay off the debt if you make the minimum payments. That timeline can be scary.

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So how do you get yourself out of the hole you are in? There are a few simple steps that we will outline below.

Stop Using Your Credit Cards

First and foremost, don’t use your credit cards anymore. Don’t close your accounts, but also don’t make your credit cards accessible. Lock them up in a safe or give them to a trusted family member to put away for you. Do whatever you think is necessary to ensure that you don’t use them anymore.

If you continue to charge up your credit cards, you will just end up exacerbating the problem. You’ll never see a zero balance on that credit card statement. As hard as this step might be, it’s necessary. Live by the rule that if you don’t have the cash to pay for it, you don’t need it.

Transfer Your Balances to a Zero Percent Interest Card

If you have good credit, you may be able to score a zero percent balance credit card. If you can get one, use it. Transfer your balances that will fit within the available balance on the card. This way you put a stop to the crazy amount of interest that grows on the debt.

Make sure you pay close attention to the dates that the zero percent interest rate is good through. Some credit card companies only provide it as an introductory period, while others give you the rate for as long as you have the card. Read the fine print and/or ask questions of the credit card company so that you know.

If you only have the zero percent interest rate for a short while, pay the balance down as quickly as you can. This way you save money on the interest you otherwise would have been charged. If you can pay the entire card off before the zero percent rate expires, you come out ahead of the game.

Ask for Lower Rates on Your Other Cards

If you have remaining credit cards that have balances, call your credit card companies to see if they will give you a lower interest rate. This is best done when you have a good payment history with the credit card company. If you make your payments late or skip payments altogether, don’t expect the credit card company to oblige.

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If you make your payments on time and you have a good history with the credit card company, though, you may get lucky enough to secure a lower interest rate. This will minimize the amount of interest you pay on the debt and allow you to get that balance paid down faster.

Come up With a Payment Strategy

Next, you need to come up with a payment strategy. If you’ve paid off the balances on your zero percent credit cards or you just don’t have zero percent credit cards, you need a strategy to pay off the rest. You can utilize one of the following strategies:

  • Avalanche – Order your credit card balances from largest to smallest. Take the credit card with the largest balance and pay as much as you can towards that card each month. Any extra money you have should be focused on that credit card. Once you pay that card off, move to the card with the next highest balance and continue down until you are out of credit card debt.
  • Snowball – Order your credit card balances from smallest to largest. Now take the credit card with the lowest balance and start making extra payments toward it beyond the minimum payment. As you pay off your cards, you move to the next card in line and do the same thing. You continue this strategy until your credit cards are paid in full.

Putting one or more of these strategies into place will help you get out of credit card debt once and for all. It’s important that you don’t put yourself in that position again though. If you’ve locked up your credit cards, leave them there. Only use them if you experience a true emergency or only if you know you can pay the balance in full all at once, but you just need the security of a credit card to make the purchase.

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