How To Eliminate Credit Card Debt

Millions of Americans are in credit card debt and looking for ways to get out. If you're one of them, I feel your pain. There are few things more frustrating than watching a chunk of your check go to a variety of creditors every month. And while you watch, you also notice the balance on your cards stays the same, thanks to finance charges, over-limit fees, or late payment fees. The credit card debt merry-go-round is a ride most people want to jump off. Here are a few things I've tried myself or watched other people try as they've fought to eliminate credit card debt.

1. Stop spending! Of course, many people get into credit card debt for things beyond their control such as medical expenses, sudden unemployment, or other emergencies. But let's face it--a lot of us have debt because "we want what we want when we want it" so we charge it even when we know, come the end of the month, we still won't have the money to pay for it. That "it" we spend on may not be very important the next day or even ten minutes later, but we buy it anyway. We'll worry about affording it later. We want the "shopping rush" or we tell ourselves we "deserve it" after a hard day at work, or we think about their smiling little faces when we give them the latest toy. Spending can be addictive. And even if you're only spending small amounts, it all adds up.
    
   In fact, you may not even know how much you spend. Experts suggest tracking how much you spend and where you spend it much like dieters are told to track what they eat and when they eat it. That can be a big eye-opener. Or, you can just quit cold turkey. Just stop taking the credit cards out of the house with you (or stop shopping online). See how it feels to stop shopping.  Getting a little edgy? Too bad there's no patch for quitting the shopping habit! Be strong! And again, no excuses. Your niece already has five Barbies; she doesn't need another one!
    
   Simple math proves if you have only so much income, and a lot of credit card debt, then you need to choose what to do--spend on stuff or pay off the debt? Of course, no one is saying you should go hungry, but eating out, buying a new outfit or appliance, or charging up DVDs at Blockbuster--these aren't necessities. They are things people have to sacrifice if they want to eliminate credit card debt.
    
2. Pay on time. If you goal is to eliminate credit card debt, you want to stop increasing that debt in any way. This means stopping spending. But it also means you want to make sure you don't accrue any fees for late payments. If you pay your minimum balance even one day late, you will be charged a fee. Sometimes, this has the effect of doubling your monthly fee for that month. Worse yet, it can affect the interest rate, beefing up what you end up paying over the life of your standing balance.
    
   And there's another way late fees can get you. If your card is close to its limit, the late fee might put you over the limit. That means, when your next statement comes around, you have an extra fee to pay for being late, potentially a higher interest rate, and a new finance charge for being over your spending limit. That's called the triple whammy, and it can end up being quite the vicious cycle.
    
   Sometimes, you just can't make that payment. If for some reason, you can't pay your monthly bill, contact your credit card company as far ahead of time as possible and see what you can work out. Also, sign up to pay bills online. That way, you don't have to worry about your check getting through the U.S. mail. Instead the site will tell you when your payment will post to your account. Sometimes, it's as early as "immediately."
3. Pay more than the minimum. I love when people say this. I feel like saying "If I could pay more than the minimum, I wouldn't have all this debt!" But the advice does hold true. If you pay more than the minimum, you may reduce your monthly balance. You may reduce the finance charge your card adds on at the end of the month. Or, believe it or not, you may actually pay off some of the principal that month. Hard to believe, I know. If possible, as you try to get out of credit card debt, pay more than your minimum balance, even if it's just a few dollars.
4. Set up a Hit List. Another way to eliminate credit card is to stop being a prisoner to minimum balances spread across multiple cards. Become a credit card debt assassin and set up a hit list, starting with the card with the highest interest rate, or perhaps that small nuisance payment you have to make every month on a two hundred dollar balance. Yes, it's tough for many of us to pay anything more than the minimum, but pinch pennies and focus in on getting rid of one card at a time. You free up more monthly cash with every card you eliminate; this will allow you to start paying more than just the minimum on your other cards which is another key to getting out of credit card debt. Plus, don't underestimate the emotional boost of seeing that zero dollar statement. And, what's more, a card with a zero balance helps your credit-to-debt ratio, one factor used when companies calculate your credit rating.
5. Ask for lower rates or switch to lower rate cards. Another way to eliminate credit card debt is to eliminate the super-high interest rates that have you paying for purchases in effect several times over. There are two ways to do this. First, you can call your credit card company and ask for a lower interest rate or for some other kind of break--waiving of a finance charge, for example. The second way to rid yourself of hideous rates is to find a new credit card offering low interest rates for balance transfers. So long old card with 29% interest, hello new card with a locked rate of 18%. Just be careful to read the new card's fine print; they can hike a rate pretty fast on some of these cards for late payments and they can also charge a nice sum for balance transfers.
6. Embrace cash. It may seem like a Catch-22:  To get out of debt, you have to pay your credit cards off, which takes all your cash. But then you're out of cash, so you need to rely on your credit cards. One key to eliminate credit card debt for good is to refuse to allow yourself to fall into that situation again. However meager the amount may be, set aside cash in a savings account so the next time you come across an emergency situation (or, okay, your niece suddenly does need another Barbie...), you won't have to rely on other people's money--and the accompanying interest rate--to pay for it.
    

Credit card debt can be an emotional drain, cause ongoing financial problems when you look to make a purchase like a car or house, and can keep you from spending money the way you'd truly want to spend it. Getting out of that debt may also be financially painful and stressful, emotionally, but the end result will be worth it. Or so I'm told.