Credit Card Debt Management

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It's a financial reality that many of us have difficulty with credit card debt management, however, it needn't turn into a financial problem. With a little planning and our step by step tips you can learn how to manage your credit card debt effectively.

Do's

Contact your creditor

Call your credit card company before they call you. Explain why it's difficult to make the payments and ask if you can reschedule or work out a reduced payment structure for the time being. Ask if they would consider offering you a reduced interest rate. This can contribute greatly to your credit card debt management plan.

Be self disciplined

You know you've got a problem, don't exacerbate it by adding more debts to your credit card bill. Show some restraint in your spending and make sure you stick to your budget. A little effort now will mean a much faster solution to your financial worries.

Pay as much as you can

Always pay more than the minimum requested, and always pay your bills on time. This way you reduce the interest charges on the account, pay the debt off faster and keep your creditor off your back.

Set goals

Decide what you want to achieve. You could aim to pay off the smallest balance first and eliminate that debt altogether. But successful credit card debt management also means keeping track of what you're paying in interest. If one card has a higher interest rate you may be wise to pay off this debt first. Keep minimum payments on the others but eliminate that unnecessary expense as soon as possible. Or you might want to consider transferring your debt to a lower interest rate credit card. See our page on how to eliminate credit card debt for advice on doing this.

Don'ts

Don't ignore the problem

Each time you miss a credit card payment you'll be charged late payment fees and interest. Credit card debt management means looking after the problem not disregarding it.

Don't use your credit card as an overdraft facility

Interest charges on credit cards are generally much higher than those on your checking account. If you can't afford to buy something in cash, or know your next pay check won't cover the expense, just don't buy it.

Don't use your credit card like an ATM card

Taking out a cash advance on your credit card is an expensive habit. Interest is accrued daily on the unpaid debt not after the end of the next statement period.

Take a savings holiday

Don't put money aside for savings when you've got a debt to service. Pay off the debt and then start saving. The sooner you pay it off the less you'll pay in the long run.

Closing accounts

Don't close a credit card account until you've paid off the balance. Credit card companies can charge hefty interest rates on accounts that have an outstanding balance.