How to Get Rid of Credit Card Debt

How to Get Rid of Credit Card Debt

5 Ways on How to Get Rid of Credit Card Debt

Each month, when all of those dreaded statements come in for your charges to those plastic cards in your wallet, your card issuer usually lets you know that you don’t need to payoff the balance. “Just pay this minimum payment”, they tell you, and before you know it, you have a high outstanding balance. Now you begin to wonder how to get rid of credit card debt.

Unfortunately, now it’s not so easy. For some individuals, there may have been a good reason why they only paid the minimum payment each month. Problems such as unforeseen medical cost, or the family car passed away, or even loss of a job.

But for many others, it was just poor cash management. They didn’t have a budget and didn’t have a clue where all of the money was going. Impulse spending with a credit card doesn’t take long to accumulate a very high balance. The average household credit card debt in the USA is around $16,000, and with the higher interest rates, a lot of cash is going down the drain.

How to get rid of credit card debt should be your primary focus. There’s only one way to begin, and that is to STOP using those credit cards. Don’t carry them with you, because for many, the temptation to buy something may be too great.

Start by listing each credit card with the outstanding balance, interest rate, the monthly payment, and the utilization rate. (More on this rate later) There are many opinions on this, but we and many financial planners, like to use the five strategies that will show you how to get rid of credit card debt.

1. If you’re like most, you have several credit cards with hefty balances. Pick the one with the lowest balance and this is the one that you will payoff first. You’ll continue to pay the minimum balance on the other cards, but all available cash will be applied to the card with the lowest balance.

Totally paying off one credit card will give most individuals a psychological boost and this is what we’re going for. If your goal is paying less interest, then you would pay off the card with the highest interest rate first. If your primary concern is boosting your credit score, then you should concentrate on paying off the card with the highest utilization rate.

Whenever you use more than 20% of the card’s approved limit, your credit score gets dinged. The utilization rate is calculated by dividing the amount owed on the card by the approved limit.

2. Contact each card issuer and request a lower interest rate. If your credit score is good (above 730), and you’ve made payments on time for a while, they will often lower the rate a couple of percentage points. It might not seem like much, but it could amount to several hundred dollars a year in savings.

Sometimes, another credit card issuer may make you an offer for a card with a lower rate. You can let your other card issuers know and they will usually match the offer.

3. A third strategy is a high interest rate balance transfer, and you must be extremely careful in doing this. You can often times find a credit card where they will offer you a lower rate if you transfer a balance to them. This can potentially be a smart move and could save you hundreds of dollars a year.

Be very careful of these offers, though, as the low rate might only be good for 12 or 18 months. If the entire balance isn’t repaid in full in that time, your interest rate can increase substantially. It’s also possible that the new card issuer may charge a fee for doing the transfer, so be sure to calculate this into the transaction.

4. Another possibility to consider is using a peer-to-peer lender. There are sites online that will make loans with a fixed rate of interest that are much lower that credit card issuers. If you’re employed, and have a good credit score, you may qualify for an online loan. That loan would of course, repay all of your credit card balances in full.

5. Another excellent strategy is to make extra payments on the credit cards every month. What this means is to send the money to the credit card company two or even three times each month. Don’t hold the extra money in your account and mail it in once a month. Your interest is calculated on a daily basis, so it’s to your benefit to reduce the balance as quickly as you can.

Here’s an illustration as to how this works, and it will blow your mind. If you had a credit card with a balance of $2,000 with an interest rate of 17%, and you paid the minimum payment once each month, it will take almost 21 years to payoff the balance.

If you paid that same minimum payment when your statement came in and then paid the same minimum payment again two weeks later, the card balance will be paid in full in about 3 years. This is why credit card issuers love people that keep paying the minimum payment every month. They make a lot of money!

There are different strategies available that will tell you how to get rid of credit card debt. If you’re in this situation, then please stop using your credit cards. Create a budget and find out where your money is going. Use all available cash to eliminate debt and one day you may find yourself enjoying debt free living.

Creditors have a limited time in which to file suit over unpaid credit card debt. This guide lists the statute of limitations that is in effect for each state. Check it out here.

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A College Student Credit Card – Get One

Why Your Student Needs a College Student Credit Card

Get a college student credit cardCollege is usually a young adult’s first foray into the adult world of responsibility.  Without a strong money management strategy, a college student credit card can cause college students to quickly accumulate debt if they are not careful.

There are several ways, including a college student credit card that can be a great ways for students to learn about handling debt effectively.

If you do not feel your student is ready for a credit card of their own, you can add them on as a user to one of your credit cards.  Your student will then have the responsibility of using a credit card but with additional limitations and liability.  It is important for you to understand the risk of taking a chance on someone else running up debt on your credit.  Make sure that you have the means to pay off any debt if your student cannot.

Another option to teach your college student about money management is to have a debit card for day to day expenses, while a college student credit card can be used only for emergency purchases.  With a debit card, your student will have to keep on budget or risk running out of money before the next pay period.

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Personal Money Management Software – Tips On Using It

How Personal Money Management Software Can Help You

Personal money management softwareMost people live with debt.  Most people struggle with living from paycheck to paycheck and even if they have money left over at the end of the month, it is not enough to survive an emergency situation. It is important to look at your own financial situation.  Can you easily take on a crisis situation of an unexpected home or auto repair?  All financial struggles can be traced back to financial mismanagement.  Personal money management software can stop that endless struggle each month and protect your future months.

To know how to budget your money, take a look at how professional corporations keep track of their spending and saving.  A corporation wants to know how much money they are spending compared with how much money the company is making.

To assess your debt and income you will need good personal money management software.

Enter all of your income sources, savings accounts, and investments to have a clear picture of how much income you have.

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Create A Family Budget Early In Marriage

Why You Need To Create a Family Budget Early On in Marriage

Create a family budgetYou read the title to this article, and I can hear you saying, “here comes another pitch to create a family budget”. Well, you’re right, it is, but please, read on because it is that important. If you’re planning on starting a family anytime soon, it really is in your best interest to be aware of the many costs associated with raising a child.

If I were to tell  you what the average cost of raising a newborn child up to and including college was, I might be accused of trying to talk you out of it. However, that’s not the purpose of this article. There will be many expenses that you might not be aware of and our purpose is to emphasize again the importance of creating a family budget and being prepared. Raising a child entails a high level of commitment for both parents. Beginning with medical bills, diaper service, as well as baby formula, can be a significant amount that some parents simply aren’t aware of.

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Personal Finance Software – Do I Need It

Personal Finance Software – Do I Really Need It?

Personal finance softwareAre you one of the many Americans that are trying to find a better way to manage money? If so, personal finance software may be your answer. Do you ever wonder where your hard earned money goes? Same answer. Are you one of many that has more month left at the end of your money instead of more money left over at the end of the month?

Well, there is a fairly simple solution to your problem, at least in being able to track your spending and budget your money properly. We all hear from those individuals who create an exotic spreadsheet in Excel and claim that is all anyone needs. That may be true for a few individuals, but for the majority, a good personal finance software program is a much better solution.

For some individuals, it may take a little longer to get the personal finance software program setup, but let me emphasize, it most certainly is worth it. The first thing that you will do is create a budget of your income and expense categories.

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Best Home Budget Software

Best home budget software

If you’re one of the individuals who would rather have a root canal done that create a home budget, there’s a light at the end of the tunnel, and we urge you to read on. It’s essential now, especially with the adverse economic conditions, to be able to track your spending, and reduce debt. With our home budget software, you can do both.

Please don’t listen to those self proclaimed financial gurus in the government. The economy may be showing some minute signs of recovery, but it will take several years for any substantial gains. Look at the unemployment rate in the US plus the absolute chaos in Europe with unmanageable debt. The additional high debt created in the US by the current administration isn’t going to help fuel a recovery either. The point that we’re trying to make is, now is the time to get a handle on your financial situation by tracking your spending, reducing debt, and very important, create a reserve fund for future unforeseen emergencies.

We are fully aware that it is difficult to begin to create a household or a personal budget. Many individuals simply don’t know how to go about it because they feel they’re not qualified, or perhaps are so burdened with debt, that there aren’t any dollars left. Some couples are even working two additional jobs just trying to make ends meet.  Home budget software can guide you through this maze.

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