Helpful Hints to Control Credit Card Debt

Credit cards fall into the category of "bad debt," or the type of debt that typically has an interest rate above 10 percent, does not offer any tax benefits and will not appreciate in value over time, according to The Motley Fool. These factors make it necessary to control credit card debt as much as possible through drawing up a budget, debt restructuring and careful planning.

Drawing Up Budget

To even begin to control your credit card debt, you must first draw up a budget of your existing expenses, and not just the ones that involve your credit cards. The Federal Trade Commission advises writing down all your fixed expenses, such as your mortgage or rent, car payment, minimum credit card payments or student loans in one section. Those are expenses that you know will not change or may change only by a few cents occasionally from month to month. Next, write down your fluctuating expenses, such as clothing, entertainment and groceries. Finally, write down the current balances and interest rates of all your credit cards, as well as their required minimum monthly payments. Remember to chart all your sources of income as well, so that you have a clear picture of where your money goes and from where it comes. Make sure you are making more money than you are spending per month. If you are not, you need to adjust your finances accordingly: spend less or find a way to make more.

Credit Card Debt Trimming

Once you know what you make and what you must spend on bills, it is time to begin trimming down your credit card debt. Personal finance author Trent Hamm of The Simple Dollar advises that you hide all your credit cards from yourself, while The Motley Fool advises keeping one or two cards with the best rates and terms in your wallet, then hiding the rest. Whichever solution you choose, the idea is to make it less easy for you to spend carelessly with your credit cards by sticking them in a cup of water in your freezer, stashing them in that dusty box at the back of your attic or anything else that makes them inaccessible. Other ways to slim down your existing credit card debt include using balance transfers to consolidate it into one or two cards with the lowest interest rate, calling creditors and asking for a lower interest rate due to your customer loyalty, and seeking a low-interest personal loan through your bank or credit union. By making it harder for you to spend money, you make it easier to pay your existing debt by not incurring much more. By trimming your interest rates in any way you can, you potentially save yourself money and time.

Debt Repayment Planning

Trent Hamm suggests that there are two main ways to go about this: through personal finance author Dave Ramsey's "Snowball" method, or through Hamm's fastest method. Using Ramsey's "Snowball" method, you first pay all your minimum credit card payments each month. Then, with whatever money you have left over, you make a single big payment to whichever credit card has the lowest balance. This allows you to more quickly feel accomplished because that lowest balance will disappear quite quickly. Hamm's method works similarly, but starts from the other end of your debt: you pay that extra money toward the card with the highest balance, rather than the lowest. While you will not feel that sense of accomplishment as soon as with Ramsey's method, it will save you money and time in the long run. Which method you choose depends largely on personal preference, but both will work if you stick to them.