Five Steps To Cutting Credit Card Debt

Five Steps To Cutting Credit Card Debt

Credit card debt ranks right behind mortgage debt and student loan debt as the single biggest wealth killer in the U.S. these days.

Consider the following statistics on consumer debt in the U.S., as of December 31, 2014:

Average credit card debt = $15,611

Average mortgage debt = $155,192

Average student loan debt = $32,264

How Much Do Americans Really Owe?

Americans currently owe a total of $882.6 billion in credit card debt, and cutting that debt down should be “job one” for any credit card consumer.

The exact opposite is happening, as U.S. consumers added $60 billion in new credit card debt from December 31, 2013, to December 31,2014, a staggering figure, given the already high levels of credit card debt U.S. adults are struggling to pay off.

Part of the problem is income-related, as millions of Americans seem to have a built-in excuse for too much debt and too little cash in the bank – “we’re too broke to save any money.”

That’s the sentiment from a recent study by GoBankingRates.com, which shows that 37% of Americans say they are too broke to save enough money to pay down their debts.

Low income is a big problem for a huge number of Americans, but it’s still no excuse for not paying down credit card debt.

To address the problem in a clear, concise and compelling way, let’s examine some tried and true (and some creative) methods of paying down credit card debt. If applied in a diligent, sustained basis, these tips can get you back on the road to a low credit card balance. This will allow you to put more cash in your pocket to pay down other debts, giving you a clean personal financial balance sheet that paves the way for a more secure, and more wealthy, financial future.

Ways to Get Rid of Credit Card Debt

Pay your debt all at once – This isn’t easy, but if you can manage it, consider a single payment for your credit card debt. Depending on your card balance, you’ll save a ton of money on interest payments, and you’ll improve your credit rating at the same time, thus giving you more financial flexibility and leverage with future creditors.

Prioritize your payments – Paying off the credit card with the highest interest rate first is the next-best method to making a single payment. The idea is to pay as much as you can to that account and then send (at least) the minimum payment due to each of your additional credit card payments. That move cuts down your biggest interest payments first, giving you more cash to pay down other credit card balances.

Stay the course – Keep making those credit card payments, without fail. You don’t need late fees. Set up automatic withdrawals so you won’t miss any payments, and can keep hacking away at your total amount owed.

Leverage a bonus or raise – If you received a workplace bonus or raise, or received an inheritance, use that cash to pay down your credit card tab. Again, that saves big on interest charges, and adds to your future income levels by eliminating high credit card interest rates.

Stick to Cash – Let’s face it: If you keep using credit cards, you’re bound to wind up with more and more debt. Regardless of the convenience, making purchases with credit cards removes an important level of self-awareness and self-control in consumers. That’s where debit cards and old-fashioned cash can (and do) help your cause. Use them, and put your credit card away in a desk, and watch your credit card debt melt away, as long as you keep making those payments.

Also, check your bill to get the visceral enjoyment of seeing your card bill decrease. That should motivate you to keep going, and not rest until your plastic debt is completely wiped away.

When that day arrives, go ahead and pop for a bottle of champagne to celebrate – but just use cash to buy it.

Posted in Credit Card
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