Eliminate Credit Card Debt

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How to eliminate credit card debt

Knowing how to eliminate credit card debt can help enormously with your overall debt management program. To wipe out the debt you need to use your credit wisely and control your spending. Doing one without the other will get you nowhere.

Stop spending

Once you realize that paying off your credit card bill is becoming a problem you've just got to stop spending. If you don't, you'll never eliminate credit card debt. Take the card out of your wallet and don't bring it with you anywhere. Shopping without your credit cards means that if you can't pay in cash you don't buy it at all.

Track interest rates

Take an interest in what banks are charging you to use their credit cards. If your bank seems to be charging you a higher interest rate than others, do something about it. Competition is rife in the credit card industry and you should use this to your advantage. Find a bank that will offer a lower interest if you switch your balance and get onto your bank to tell them. Ask them to offer you a better rate or threaten to move your balance elsewhere. If they won't reduce your interest rate ask them to waive the annual fee or late payment fees. If they won't play ball, go ahead and switch to another credit card provider.

Introductory offers

If you decide to switch provider beware of introductory offers. Credit card providers excel at making tempting low-interest offers that expire after three or six months. Rates then shoot up and you're left carrying the debt and the interest.

Annual fees

Another stumbling block is the payment of annual fees. If you're considering moving your balance, don't forget to ask what you'll be charged for the privilege of having the card. Some companies ask for as much as $50.

Pay more than the minimum

Always pay more than the minimum amount requested on your statement. If you only pay the minimum a debt of less than $5,000 could take up to 45 years to pay off - even if you buy nothing else on that same card ever again. And in those 40 odd years you'll rack up almost £20,000 in interest charges! If you can afford to pay off the whole bill each month, do so, you can save hundreds of dollars each year in interest and eliminate your credit card debt faster.

Get rid of extra cards

If you've got more than one credit card and you're having difficulty managing your debt or controlling your spending just get rid of them. You'll cut out the annual fees on each one and reduce temptation. If you must, keep one card for emergencies but put a sticky note on it saying, 'You already owe $X on this card', at least it'll make you think before you use it.

Don't be a victim of fraud

Increasingly, credit card holders are finding themselves the victim of fraud. If attempting to eliminate credit card debts is already causing you problems you certainly don't want anyone else racking up purchases on your account. Check your statements regularly and thoroughly, don't just assume they're correct. Report any discrepancies to your credit card company immediately and if your card is stolen cancel it as soon as you realise. Buy a shredder to destroy any documents that state your banking details. And if you make purchases online make sure the site is secure and your password not easily recognisable