Credit cards are a convenient way to pay for goods and services but their ease of use can lead to overspending and the accumulation of crushing debt. Credit card interest rates tend to be high, so if you accumulate a balance, it can be difficult to afford payments. There are several debt management strategies consumers can use to control credit card debt.
Cut Spending
Cutting spending is perhaps the most important first step to take if you are having difficulty making credit card payments. The more you use your card, the higher your balance and the more difficult it will be to pay off. Common expenses that are not absolutely necessary, like coffee, alcohol, shopping, eating out and cable TV can add up. Cutting back spending to the bare necessities can leave you with more income left over each month to pay down your credit card debt.
Contact Creditors
If you are in danger of missing credit card payments, your creditors may be willing to work with you to help you make payments. The US Federal Trade Commission recommends that consumers contact creditors immediately if they are having trouble making ends meet. If you can make a strong case for why you are having financial difficulty, the creditor may be willing to modify the terms of your debt to make it easier for you to pay back.
Sell Assets
If you hold assets of significant value, like real estate, cars, boats, jewelry, stocks, bonds or collector's items you can sell the assets to pay back credit card debt. Since credit cards often carry interest rates in the double digits, paying off debt as quickly as possible is usually a good investment. For instance, if you have $5,000 invested in stocks and $4,000 of credit card debt with a 12 percent interest rate, you will likely benefit by cashing in the stock and paying the debt.
Debt Management Plans
Debt management plans (DMPs) are programs offered by credit counseling agencies to help consumers pay off debts. Under a DMP, a credit counselor will develop a plan with you and your creditors to pay back your debts. Depending on the program, a counselor may provide a service as simple as a budget or pay your bills for you with the assets you provide. The FTC states that DMPs can help you with paying back a variety of debts including credit cards, student loans and medical bills.
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