How to Clean Up Credit Card Debt

Cleaning up credit card debt is difficult. According to Bank Rate, it's important to take getting out of debt one day at a time. Paying down credit card debt takes time. Making changes such as developing a realistic budget, negotiating lower interest rates and settling with creditors will help. It's also important to realize when you need extra assistance cleaning up credit card debt. Debt counseling and debt management plans can provide assistance.

Instructions

1

Develop a budget. First, list all of your monthly expenses. Then, list your income. Look for opportunities to cut back on expenses to pay more towards your credit card balance. For example, if you eat out frequently, trimming these expenses could save you $100 or more a month.

2

Negotiate a lower interest rate. With a high interest rate, you're paying more towards interest and less towards principal. If your lender won't negotiate a lower rate, consider balance transfer offers. These offers allow you to lock in a low rate for a set term.

3

Settle with debt collectors. If you have credit card accounts in collections, contact the debt collector and set-up a payment plan. Some collectors may be willing to settle the debt for a cash settlement (lower than what you owe). Handling collections will also help raise your credit score.

4

Attend credit counseling. If you're having challenges sticking to a budget and paying down credit card debt, credit counseling may help. Credit counseling is available at a variety of organizations, such as the local housing authority, credit unions and universities. Counseling will help you create a plan to payoff debt and create a realistic budget.

5

Enroll in a debt management plan (DMP). Debt management plans help consumers negotiate with credit card companies and create realistic repayment plans. With a DMP, you deposit an agreed amount each month (with the DMP) and the DMP pays the creditors. This keeps borrowers more accountable and helps pay back debt sooner.