According to a research done, the average credit card debt in the US is about $9200. That figure is just an estimate but I am sure there are people who have more credit card debt than the figure mentioned above. When you are young and are just starting out on a job, you will probably be given only one credit card. However, if you consistently make your monthly payments, the banks might be willing to give you another one. However, the situation changed during the recent credit crunch, where banks are no longer willing to give out credit cards. Even people are left with an enormous amount of credit card debt. How to get out of credit card debt? Most people apply for a new card and use the proceeds from the new card to pay off the old one. However, this practice is not feasible because you are just piling up on new debt. More often than not, you just manage to meet the interest payment. Here, I will list down several practical ways to help you overcome your credit card fiasco:
1. Go over your budget. You need to reduce unnecessary expenses to increase cash flow and to have more money in hand. Use your cash in hand to reduce your credit card debt and eliminate them, one card at a time.
2. Another thing you can do is to calculate the minimum payments on every credit card you have and check its APR. Always target the card with the highest APR. When you are paying your credit card debt, pay the minimum balance and put in additional cash to cover the principal. If you keep doing this, you will reduce the balance and the accumulated interest.
3. Always check your credit score from time to time to see whether you credit ratings have improved or not. You can check your credit score for free by clicking the banner below.
4. When you are done with the highest APR card, move to the second one and repeat the same strategy as the first, while at the same time, paying off the minimum payment on card 1. You would want to tackle all the accumulated interest on your credit card debt. Continue until you have reduced your monthly credit card minimum payment substantially.
5. As you pay down your credit card debt, calculate the difference in total monthly outlay, if you were to make only minimum payments. Add this amount to your initial additional monthly excess payment. Say, if your original minimum payment on the first card has been reduced from $200 to $100, you can take the additional $100 and tackle the payment on your second card. Or you can use the balance to clear a high APR credit card or credit cards/department store credits with smaller balances.
6. Your next best move can be credit consolidation. You should always check with a credit counseling organization to get advice on the best strategy. They can also help you negotiate a lower interest rate with credit card companies.
Credit card is an art of compounding interest at its finest. In fact, banks love to keep you in red because they can make money from your interest payments and late fees. Thus, you have to manage your credit card debt wisely.
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