How to Eliminate Your Credit Card Debt

Eliminating credit card debt is one of the top priorities of many Americans. Most Americans have credit card debt of around $10,000. Many have much more.

Wanting to eliminate credit card debt is a good first step, but it takes much more than want to get it done. When you are serious about eliminating your credit card debt, you will find that a few simple steps will get you on the way to being debt-free.

Step One: Know How Much You Owe

Before you can even begin to eliminate your credit card debt, you need to know how much you really owe. So many people are so overwhelmed by the thought of their credit card debt that they don't want to know how much they actually owe.

By avoiding the idea of how much you owe, who you owe and how much you are paying in interest, you are able to ignore the fact that you have a problem.

Start by getting a complete picture of how much you owe, how much you are paying in interest and fees and what your monthly payments are. Make a list of all of your debts, from highest interest rate charged to the lowest. List the account, contact info, balance owed, interest rate and monthly payment. This is your master debt list.

Now sit down and look at your monthly income and monthly spending. Chances are that you don't have much extra money to devote to paying off your credit card debt. You'll have to find the money to make the extra payments.

Step Two: Cutting Your Spending

You can't just make a plan to pay off your credit card debt and not cut your spending. The reason you have debt is that you spend more than you have. No matter how much money you put towards paying off your debt, you will not be able to eliminate the debt if you don't stop spending.

You simply have to stop using your cards. Put them in a safe deposit box or in a gallon of water in the freezer. Cut them up if necessary. The key is to not carry one with you. You can't use them if you don't have them.

Look at your spending very carefully. It is actually quite easy to find ways to trim your spending. If you shop around, you can cut many of your necessaries, such as your insurance premiums, your cell phone plan, your cable and internet services. You can find ways to cut your utilities and grocery bills. If you pay attention to your spending through a budget, you will be able to cut back considerably.

And remember, if you can't pay with cash, you can't buy it.

Step Three: Lower Your Rates

Take back out your debt master list and start taking steps to lower your credit card rates. The higher your interest rates, the longer it will take you to pay off your debt.

Start by calling each of your credit card companies and asking for lower rates. If you have consistently paid your bills on time, you shouldn't have any problem getting a lower rate. If you haven't, you may not get a lower rate. But it never hurts to ask.

If you can't get the company to lower your rate, then you should start shopping around for a card with a lower rate and a balance transfer feature. Many cards offer low initial rates for balance transfers. You can use these to your advantage and pay off your debt in a faster manner. But once you transfer your balance, you should cancel your old card or cut up the card. You don't want to continue to use it.

Step Four: Use the Snowball Method

The most money and time effective way of paying off your debt is the snowball method. Start by adding as much as you can to your highest interest debt and get it paid off quickly. During this time, pay at least the minimum payments on each of your remaining credit cards. When you have paid off the first card, put the amount you were paying on it towards the second card. As you go, you build momentum and are able to pay each card off faster and faster. You snowball your debt away.

Martin Lukac http://www.MartinLukac.com , represents http://www.RateEmpire.com , an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com

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