Consolidate Credit Card Debt

Credit card debt in the United States is truly reaching epic proportions. Total credit card debt at the end of 2008 was nearly $972.73 billion, an increase of 1.12% from 2007. In fact, the average credit card debt per household in 2008 was $8,329. In addition, the average balance for each open credit card was $1,157 at the end of 2008, a figure that is up 11% from just 2 years prior. Credit card debt is not just a big problem; it is a problem that continues to get worse year after year.

So now that you are completely mortified and ashamed that you are a part of this growing trend you must ask yourself this question; what can I do about it? Fortunately, you came to the right place. After reading this article, you will be well on your way to managing or even eliminating your credit card debt.

The first way to start to reduce your credit card debt is fairly obvious, stop using them! While this may seem like an unneeded suggestion, it is actually the best way to control your spending. You must learn to spend the cash that you have left over from paying your bills. A second suggestion is consolidate credit card debt. This is the act of moving your credit card balances with high interest rates to those cards with lower interest rates. While it may be annoying to have to move your credit card debt from one 0% card to another, it will save you money and buy you time. Third, you need to start making double payments. Usually the minimum payment on your bill is only interest so you need to pay more than that to make a dent in the principle. The combination of paying down principle and not using your cards will result in your balance decreasing.

The most important two words to remember when trying to master credit card debt consolidation are “interest rates”. When you have a high interest rate on one of your cards, you are spending an exurbanite amount of money to borrow that credit. It is very important that you look at all of your interest rates and determine the highest rate. You now have your initial victim; this is the card that you want to focus most of your effort on. Once you pay this card down then your overall debt should stop growing so quickly.

You should try consolidating credit card debt as soon as you can. For example, if you have roughly $200 on each of your credit cards, they have interest rates between 11% and 22%, and then you move those balances to a card with a 5% interest rate, you have effectively given yourself more cash flow that you can use to pay down the new principle on the 5% card. However, in order for this method to work you must tear up your old high interest cards. Some people think that they should save them for an emergency, but this does nothing more than create temptation.

If you are a homeowner, you have another way to consolidate credit card debt using a credit card debt consolidation loan. You can do this by using the equity that is in your home. What you would need to do is take out a home equity line of credit. You would then have a very low interest rate loan that you can use to pay off your credit cards. Yes, you are creating yet another bill to pay but when you consider the interest savings, as opposed to credit cards, it is well worth it. You will be able pay off the HELOC loan much faster than you would be able to pay off your credit cards. Even if you decide to go this route, you will still need to throw away your old credit cards and learn to live on cash.

It is no wonder that the debt relief (aka credit card debt consolidation services) industry is growing at an amazing pace in recent years. These companies can often negotiate with your credit card companies (for a monthly fee) to lower your interest rates and even reduce your balance. Most times, you actually send your money to the credit card counseling service and then they send the payment to the credit card companies. You will get statements from your credit card companies so you can keep track of the progress you are making. If you can find a legitimate service that you are comfortable working with then this may be a viable option for you.