How To Get Rid Of Credit Card Debt

Credit card companies are making it easy to get into credit card debt. They mail you enticing offers you cannot refuse, then they charge enormous interest rates. Credit cards make paying for things very simple. You spend money you do not have, and you keep applying for new credit. Before you know it, you are knee deep in credit card debt, and no end is in sight. Therefore, you must find ways to eliminate your credit card debt. If you have a significant amount of credit card debt, here are 7 tips to help you get rid of the debt.

1. Pay off highest interest rate cards

credit card debtYou do not realize how much money you are paying the credit card companies in interest. If you have huge credit card debts, you need to pay off the card that carries the highest interest rate first. Just pay the minimum amount you own on all the other cards, and pay as much as possible to the card with the highest interest rate. Eventually, you will save money because you will eliminate the card that is charging you the most in fees. The longer it takes you to pay off the card, the more money you will be paying to the company. After you pay off this card, you can pay of the next card with the highest interest rate. You will eventually eliminate your credit card debt one card at a time.

2. Transfer balances to another card

Your credit card debt will be easier to manage if you put all of the debt onto one card. You will only need to make one payment each month to creditors, and your overall amount that you will pay each month will be lower. In order to do this, you first need to make a list of all your creditors and how much you owe each of them. You also need to make not of the interest rate of each card. You then need to search around for credit card companies willing to offer you a zero percent interest rate for balance transfers. This card should also offer you a good introductory interest rate. You can then apply for a card online. After you are approved for the card, you can transfer all of your balances to this card. Keep in mind that you cannot exceed your credit limit, so if you have huge credit card balances, this might not be an option. You might also need a good credit score to be approved for new credit. After you consolidate debt, you need to stop using your other cards.

3. Form a Budget

You might not realize what your money is going to each month; therefore, you need to do a better job of managing your money. You need to know exactly what is coming to and going out of your bank account. You can find budget worksheets online, so you need to print one out. List all of your income that you bring in each month, and list your total expenses each month. Make sure you include your mortgage, car payment, utilities and groceries. You also want to list the amount of money you are paying on gas, and you will want to include the credit card bills you pay each month. You want to allocate as much money as possible to contribute to your highest interest credit card. Throughout the month, track your spending, so you can make sure you are sticking to your budget. Each month, keep this budget and keep paying off your credit card with the highest interest rate. After you get that card paid, you can go to another card until they are all paid off. Keep in mind that by forming a budget, you might need to eliminate some of the entertainment expenses that you absolutely do not need.

4. Debt consolidation loan

You can apply for a personal loan and pay off all of your credit cards. Consolidation loans usually provide a lower interest rate, so your monthly payment amounts will be lower. Before applying for a loan, know exactly how much you owe on your credit cards, so you can apply for a loan for the correct amount. You can then begin searching for lenders. Your credit will be checked before you are approved for a loan, so you might check your credit score before you apply. The lender will want you to submit certain documentation before they can approve you for a loan. If you have bad credit, you could consider obtaining a home equity loan. This is a secured loan in which you use the equity in your home to acquire a loan. Keep in mind that your home is used as collateral, so if you do not make payments, you could lose your home.

5. Debt settlement

Debt settlement involves negotiating with your creditors to get a lower payoff amount. This is usually an option if you are currently behind on your payments. Your creditors will be willing to negotiate if they think you might file for bankruptcy. If you file for bankruptcy, the creditors will not receive any money that you owe, so they might be likely to negotiate. In some cases, you might want to receive help from a debt settlement company. They are experienced in negotiating with creditors, and creditors might be more willing to negotiate with a professional. By settling your debts, you can get your interest rates reduced, and you can get certain late fees eliminated. The creditor might want you to pay one lump sum, so if you do not have the funds, this might be a problem. You cannot use your credit cards anymore; however, this might be a good option to eliminate your credit card debt.

6. Get another job

In order to pay off your credit card debts, you might need to consider obtaining a second job. You can work nights or weekends until you pay off your credit card debt. This could be exhausting because you will not have much free time; however, it will be worth it once you get your credit cards paid. Having credit card debt is stressful and can cause a lot of anxiety, so paying off your credit cards will relieve the tension you might be feeling. Therefore, you can work a little harder in order to eliminate your debt.

7. Bankruptcy

Bankruptcy should only be used when everything else fails. If you just have mountains of credit card debt, and there is no way that you can make your payments each month, you might just start over. With bankruptcy, your credit card debts will be forgiven, and you can obtain a fresh start with your finances. This process is very time-consuming and stressful, and you will need the assistance of an attorney. Filing for bankruptcy will also remain on your credit report for up to 10 years, so it could hurt your ability to obtain new credit. If you do apply for a loan, the interest rates will probably be very high. Bankruptcy should only be used if no other options are available. However, bankruptcy can eliminate your credit card debt.

There are many ways to get out of credit card debt as you can see. It’s very easy to get into debt but it’s quite difficult to pay off your debts especially with a high interest rate. It’s better to get started now instead of putting it off for another day.