Search form

Donate Today

Cash With Draw

Getting Rid of Credit Card Debt

If you're only making minimum monthly payments on your credit cards and hate that balances are growing out of control, there is a way to dig out from under credit card debt, whether your balance is $3,000 or $103,000. 

The quickest way to save big is to negotiate a lower interest rate. A simple, polite phone call to each credit card company may be all it takes. 

Now comes the hard part: Tracking your expenses and sticking to a budget. It's hard to make huge changes to lifestyle, but cutting "back" can be as effective as cutting "out." For example, ratchet down your cable service, turn down your thermostat, or eat out one less time per week. 

Once you have extra cash each month, there are two strategies:

One is to plow as much as you can into the credit card with the highest interest rate, while paying the minimum on the others. Once the first card balance is paid off, cancel it and move to the card with the next highest interest rate. A second strategy is to pay off your card with the lowest balance first — which can be a confidence boost — while continuing to pay the minimum on the others. 

Choose your strategy, rank your credit cards, and get going. While you're doing that, put your credit cards away, and pay cash whenever possible. Research has shown that paying cash makes people think harder about their purchases. 

While there are ways to dig out of debt, the best strategy is to avoid falling into debt in the first place. When it comes to credit card companies "it is their money, and their game," so learn how to play. Make sure that you are regularly paying more than the monthly minimum on your credit cards, and that you frequently check your credit report.

Sure, you may have a friend who manages to balance their ten credit cards, but for most people, this is where they get into trouble. Consolidate your credit spending into only the cards that you can manage to pay off regularly. Experts advise having no more than two credit cards — one for everyday spending and the second for emergencies only.

Overwhelmed by your debt? It could be time to seek some professional help. Check out these tips for finding a credit counselor ►

More from DFI: Credit & Debt