How Can I Pay Off My Credit Card Debt?

America's revolving debt balances increased an astonishing 75 percent over the 10-year period ending in 2007. Since then, credit card use declined precipitously, corresponding with the downturn in the economy. Many consumers found themselves in over their heads, struggling to manage their finances. Eliminating credit card debt is life-changing. It won't be fun or easy, but the rewards of an empty mailbox and a full wallet will last a lifetime.

Where to Begin

Getting a realistic picture of what you can and can't afford will help tremendously.

Choose a time when the house is quiet, and gather the necessary materials: pen, paper and calculator or a computer spreadsheet. Collect the bills you pay on a regular monthly or quarterly basis. Don't forget to include groceries and gas or other commuting expenses. Make a list of recurring bills; with the credit cards, include the creditor name, account number, phone number, balance, minimum payment and interest rate information. Subtract your expenses from your income. What's left will be what you have to work with.

Methods of Debt Repayment

Solving the debt puzzle.

Call your credit card companies. Customer service representatives often can reduce interest rates over the phone. Be sure to ask if this will affect your credit report or change your available credit line. The upside to these phone calls is that a lower interest rate will increase the amount of principal you pay off every month, shortening the life of the loan and saving money.

The best and least costly way to reduce credit card debt is to pay off the card with highest interest rate first. Make a list, with the highest interest rate loan at the top, and plow all additional funds into increasing the payment on that loan, without incurring any new charges.

Most credit card issuers allow multiple monthly payments; it may be easier to make payments several times during the month instead of in one lump sum. Also, there's a psychological benefit from watching the balance go down weekly. Developing and maintaining a regular debt repayment schedule will become its own reward, with the appropriate amount of commitment.

Don't forget to put the credit cards away. Paying one only to run up another will only make the debt problem worse.

Push Your Payments

Discipline and a realistic attitude are the keys to success.

Once you pay your first bill in full, apply the payment that you would have made on that bill to the next bill on the list the following month. Continue in this fashion until your debts are paid. Be certain to check the interest rate on the outstanding cards, in case a rate skyrockets suddenly.

When You Need More Help

Help is available if you need it, so don't be afraid to ask!

Don't give up! Money matters are frustrating, and help is available. Contact the National Foundation for Credit Counseling, a nonprofit agency dedicated to helping consumers get back on their feet. NFCC offers a free consultation, and a debt consolidation or management plan may work. Keep in mind that a consolidation or management plan affects your credit score and also makes it difficult to get a loan.

Debt settlement is also a possibility, but it is very damaging to credit; when the settlement is reached, you usually must pay it in one lump sum. In addition, it can be difficult to find a reputable debt settlement specialist. However, if the next solution is bankruptcy, debt settlement is your best option.

Remember that paying debt is the opposite of racking it up. Good financial management begins with understanding and controlling credit card use.