What Can I Do About My Credit Card Debt?

"If you sign up for our credit card, we can get you an extra 20% off today's purchase" is one of the most dangerous statements out there today. "Oh sweet, 20% more off is great, it's not like I shop here a lot so I can manage the payments" might be your thought as you fill out the application and hand over your information. But then you start using it, and suddenly you maxed out your first credit card.

Some people don't stop with one though and end up with many different types of cards, each allowing you to borrow a different amount, until most of your spending comes from these little pieces of plastic. Acquiring credit card debt can happen fast, but getting out of it is another matter entirely.

Slow and Steady Wins The Race

Unfortunately there is no fast way to get rid of credit card debt. Sure cutting up the cards might seem like a pretty finite way of ending it, but you still owe the companies the amount you borrowed, plus whatever interest they charge. Be sure you think carefully before trying to manage your debt on your own. There are resources to help you! For one, check out: The Federal Trade Commission. For some easy moves you can make on your own, here are five steps to managing your credit card debt:

1. Organize everything

Separate out your bills in order from highest interest rate to lowest, making it easier to see which cards you might want to get rid of first.

2. Figure out how much the total balance is you owe

Most likely this number is going to be more than you have, or more than you are willing to spend, but seeing it will help show just how bad running every credit card up can get.

3. Figure out which cards you owe the most on, which the least

This is another way you could organize your cards, instead of doing it by interest rates, the main reason I suggest looking at your balances for each cards is to figure out which ones you use more frequently than others, maybe you will decide you don't need a few because you never use them.

4. Make a payment plan

There are two different ways to go about this payment plan. The first way is to begin paying off your high interest loans so you get them off the table, in the long run removing these will save you interest payments.

Of course if you have a few low interest cards that only have say $100 on them and you would prefer to pay them off because you can, go ahead. Just remember because they are low balance and low interest your minimum payments would be small in comparison to any high interest payments.

5. Completely pay off 90-100% of the cards

In a perfect world I would say pay them all off and then don't use them for a while, but in this economy a credit card is pretty useful. So if you can't pay them all off that's fine, but choose which ones you want to keep open and get rid of the rest. Use the payment plan you created as your schedule, always getting your payments in on time.

Credit Card Debt Damage

It's not just your finances that will take a plummet after credit card debt, but your credit score will drop as well. This can hinder you from applying for a loan, purchasing a car, or even putting a down payment on a house.

It's because of this that I recommend keeping at least one card open. After you get all of your finances straightened and each card paid off in full, you want to ease yourself back into the light. The best way to do this is to use one credit card, but always pay it off before the deadline and keep the balance low. After a while your score will begin to rise again.

Even though it may only take one year to accrue credit card debt, it does take 10 years for any negative information to fall off your credit score. So keep this in mind when you spend.

Where can I go for help?

A great place to start when you have credit card debt is with a financial advisor. Some banks such as Bank of America and Wells Fargo provide assistance through both counselors and programs to help you cope and remove the debt.

The Federal Trade Commission will also can provide you with information about how to find a good Credit Counselor or verifying a company you find online is legit and not a scam. Checking with your State Attorney General or a local consumer protection agency will help you siphon out the good companies from the bad, the last thing you need is to get scammed on top of everything else.

Another way to get rid of debt is to apply for a installment loan. Many banks offer settlement loans where you can lump each total balance together and get a loan for that amount. These loans will have higher interest rates and most likely will require you to put something up for collateral, but can help you get the cards paid off and provide you with one payment each month (or every two weeks) instead of however many cards you have.

In the end...

The most important thing to remember when dealing with credit card debt is that there is a light at the end of the tunnel. Sure you may have a few hard years in front of you, but in the end you will be better off because if it. Living with credit card debt limits what you can do with the finances you have and can make your life more difficult in the long run. The best thing you can do for yourself is to get rid of the cards you don't need and pay off everything.

You aren't alone in this struggle, hundreds if not thousands of Americans deal with debt every day, so don't be afraid to ask for help. It's your life, so pull yourself back together and start changing it for good.

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