Financial Advice Blog

Without effective credit card debt management, it would be impossible to rise from overwhelming debt problems and get back control of your finances.

Most of us in America have multiple credit card accounts. This plastic card has been so accessible to almost anybody and it has been considered as an easy to acquire, hassle free type of loan. Sad to say though, most of us have abused its convenience. Resulting to a nation that is now suffering from overwhelming debt problems.

Each and everyone of us should know by now that if credit is abused and used irresponsibly, interest charges will accumulate fast. This will lead to debt that may be uncontrollable. If you are one of the many who are deep in credit card debt, here are some credit card debt management tips that might help ease the burden.

1.  Make a thorough assessment of your total credit card debt.

List down all your credit card accounts and the outstanding balance of each one. If you do not have them on hand, then check them online. It is usually included in creditors’ services to provide their clients with online credit card statements. These statements have complete and detailed information about your past and present balances and transactions.

Include in your list each account’s outstanding balance, minimum requirement, interest rate, annual percentage rate, maximum spending limit, and how much credit you have left.

2.  Apply for a debt consolidation.

Among all your creditors, check which of them offer the lowest interest rate. Check also with other banks if they offer lower rates than any of your existing lenders. Once you have chosen which company will give the best deal, transfer all your balances into that account. Many major credit card companies offer promotions that will give you not only a lower interest rate but also a full year of zero interest if you transfer your other credit card accounts with them.

If it is not possible to transfer each credit card account, try at least to transfer those with the highest interest rates. Transferring your accounts with high interest to a lower interest card will save you a considerable amount of money in the long run.

3. Prioritizing your monthly credit card payments.

After you have consolidated your credit card balances into a few lower interest accounts, give priority in paying off loans that have the highest interest rates. With these accounts, pay more than the monthly minimum requirement. It is advisable that you pay double of the minimum payment each month.

This does not mean that you will neglect the balances with lower interest rates. For those balances, you may pay the minimum payable amount monthly, but pay consistently. Defaulting on a payment will automatically increase the rates of your account. Also, stop charging with the credit cards that have high interest rates. Use only the low interest rate cards if needed.

4.  Now is not the time to save. Any extra cash should be coursed to reducing and eventually eliminating debt.

If you are deep in debt at this point of your life, you simply cannot afford to save for a rainy day. Every extra cash you have should be used to pay of your existing loan. This may seem to be an unusual advice but there is some logic to it. Think of it this way: if you leave your money static in the bank, it earns an interest of about 0.5 to 2 percent per anum. On the other hand, you pay as much as 20% interest rates on high interest balances per month. So if you leave your money in the bank and continue accumulating interest charges, at the end you will be paying 240% on interest while your savings would be giving you maybe 1% interest. Surely, you can compare how much you save if you put all extra cash you have into paying your loan instead of depositing it in a bank for a measly interest.

5.  Stop using plastic and pay with cash instead.

This is probably the most vital factor in a successful credit card debt management. If you do not charge with your card, then you do not end up owing any of your creditors. Since you are already knee high in debt, it is probably wise to put a halt in further debt accumulation. It is not that easy, who said it was. But imagine how it would be like if one day you get your credit card bill in the mail and in it would be written “you have 0 (zero) balance to pay”. That would surely be an achievement. With ample discipline, determination, and a little bit of sacrifices here and there being debt free may not be a distant dream after all.

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