Getting Out Of Credit Card Debt

Getting out of credit card debt seems like a daunting task, but luckily for you it isn't too hard.  You have to know what options are available to you and which option you should choose.  Keep in mind that unless you are willing to suffer the long term consequences of bankruptcy, you will have to pay back a significant portion of your debt.  You can get out of credit card debt without having to pay the full amount, but that should be seen as your last resort since it will leave a permanent scar on your credit report.

The absolute, most important first step is to stop creating more debt for yourself.  Find the credit card that has the lowest monthly APR and keep that one in your wallet for emergency use only.  The other ones have to go away.  If you don't cook, stick them in the pantry.  If you don't fix things, put them in the toolbox.  Just stash them away somewhere you won't be tempted to dig them out and use them.

Are your credit cards stashed away?  Good.  

Read on to learn how to pay them down and get out of credit card debt easily.

Image courtesy of Andres Rueda via Flickr.
Image courtesy of Andres Rueda via Flickr.

Get Out Of Credit Card Debt Yourself

Before jumping out and finding a debt consolidation company, or looking for a loan to pay off all your debt, first figure out if it's something you can take care of yourself.  You probably can, there just needs to be a plan in place that you can follow, and you have to stop making more debt.

In order to get out of credit card debt effectively, you must prioritize your debts.  Find all of your monthly statements and lay them out on your kitchen counter.  With everything in front of you, take a look at their APR and organize them from the highest interest to the lowest.  The ones that have the highest interest will be the ones that you attack the most aggressively.  When you start with paying the high interest cards, you will slow down the speed that your debt is increasing.

Once you have all of your statements out, you can figure out what the minimum monthly payment is for all of them.  Add up the minimums and balance that against your salary and personal budget.  You obviously have to eat and keep the roof over your head, but any extra cash has to go towards paying off the high APR credit cards that you have.  As soon as you get the high APR cards under control, the rest is a breeze.  If you have an extra $500 a month that you can pay towards your debt, divide that amount among all of the cards but the majority should go to the crazy APR cards.

Negotiating With Credit Card Companies

If you've been with some of your credit card companies for a while, they may be willing to reduce your APR.  Don't forget that you're their customer, and the customer is always (sometimes) right.  Tell them that you're considering jumping to another company that is offering a lower APR (you don't have to be totally honest here) and you are wondering if they would be willing to lower theirs so that you can stay a customer.  If your APR is 12% or less, they probably will tell you to climb a tree, but anything above that will have a good chance of being lowered.  This is the easiest way to reduce your credit card debt.

Get Out Of Credit Card Debt With Consolidation

During the process of determining your minimum monthly payment for all of your cards you may realize that you can't afford to pay the minimum, let alone toward the principle. If this is your case, it's probably time to seek out a credit card debt consolidation company.  Keep in mind that a record of using a debt consolidator will be on your credit report for years to come.  This will affect your credit score.

Credit card consolidation companies will look at all of your current debts and contact all of the creditors and banks to reduce your debt.  You will then make a payment directly to the consolidation company and they pay the debt for you.  They are usually more successful negotiating with the banks than you because of the long term relationship that they have.

Either method you choose is a great idea for getting out of credit card debt.  The worst thing you can do is keep waiting and making more debt.

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