How to Eliminate Credit Card Debt

Credit cards are a true modern convenience. They're a safe way to pay online and are usually necessary for car rentals and hotel reservations. It's much easier to whip out a credit card than to carry cash. Sometimes credit cards are too easy to use. Credit card debt can become a problem when balances are not paid off monthly and fees accrue.

There are steps you can take to get rid of credit card debt. The first and most important step is to stop using the card. Keep making the same payment you're making now until the card is paid off. Do not lower your monthly payment as the card balance decreases.

If you have several credit cards, do not cancel them all at once. This could cost your credit score points. Cancel them gradually and keep only one or two cards. Store the cards in a safe but inconvenient place. One popular method is to freeze the card in a block of ice.

Theoretically, you can't use the card until you thaw it. Die hard credit card users know their credit card numbers, expiration dates and security codes by heart. Do whatever it takes to keep yourself from using the card for anything less than a serious emergency,

Line your credit cards up in order of balance, from lowest to highest. Try to make higher payments on the card with the lowest balance (providing there is not a large difference in interest rate on the cards). If one card has a higher interest rate than the other cards, pay it off first.

Once one card is paid off, keep making that card's payment on another card, in addition to the payment you're already making. For example: you pay $50 monthly on card one and $60.00 monthly on card two. When card one is paid off, you now pay card one's payment of $50 on card two. You also make card two's regular payment of $60. If you have another card balance after cards one and two are paid off, you continue to pay cards one and two's payment amounts on card three, in addition to card three's regular payment. Keep combining payments like this until all card balances are zero.

Pay credit card statements on time. Always. Some credit card companies will allow you to sign up for automatic email payment reminders ahead of time. If this option is available, use it. Card company processing dates differ so schedule accordingly. If your payment is due on the fifth, but the card requires that payments be scheduled 24 hours in advance, you'll need to go online the day before your payment is due and schedule it. Miss the deadline and the credit card company just added a late fee to your account and dinged your credit score.

If you are mailing your payments instead of paying online, mail them well in advance. Consider paying extra for delivery confirmation.

Don't automatically cancel all of your credit cards once they're paid off. This can actually hurt your credit rating. Do stop using the cards. Put them away in a safe but not easily accessible place. Make it very inconvenient to find them or use them. Gradually cancel cards until you are down to two.

Smart Credit Card Practices

Try to get high interest rates reduced. If you have been making payments on time for at least six months, call your card company and ask them to reduce your interest rate. If they refuse, wait a bit and ask again.

Pay early. Credit card companies make 30% of their profit from fees for late payments and over-limit charges. Mail early or schedule online to prevent fees.

Eliminating credit card debt isn't always easy but it is worthwhile. There are a variety of organizations aimed at helping consumers manage credit card debt. If you're having serious problems, contact a credit counselor.

Following the basic steps by stopping credit card use, paying the same minimum payment monthly and not reducing it as the balance is reduced, and combining payments as card debt is paid off will help you to eliminate credit card debt.

Used wisely, credit cards are a convenient and powerful tool. Learn to manage credit cards before credit card debt enslaves you.