Amassing a load of credit card debt can feel like a constant weight on your shoulders. As of June 2010, the total revolving U.S. consumer debt was $2.42 trillion, according to the Federal Reserve. Clearly, U.S. citizens are having a difficult time repaying debt. However, if you're serious about clearing your debt, there are options for you.
Rising Interest Rates
If your credit card's interest rate is already high or has increased, it can become very difficult to make any headway on repaying your debt. Some people find it useful to open a new credit card with a low interest rate and then transfer debt from the old card to the new. In this scenario, it may be best to transfer only part of your balance to avoid balance transfer fees and keep a cushion between your balance and credit limit on both cards. If you do choose to do a balance transfer, it is advisable not to keep "jumping" your credit from one card to another, since this will hurt your credit score.
The Minimum Payment Trap
The trouble of making monthly minimum payments goes hand-in-hand with high interest. If you pay only the minimum on an $8,000 balance with an interest rate of 18 percent, it will take you 360 months to pay it off (that's 30 years). In the meantime, you will have paid $11,615 in interest. If you pay $500 a month on your balance instead, you'll have it paid off in just over a year and a half, only having paid $1,217 in interest. Don't fall into the minimum payment trap.
Multiple Credit Card Bills
Having multiple credit cards can make it difficult to keep track of due dates, and often with high-interest cards it may seem like you're not getting anywhere with your payments. The best way to take care of this problem is to pay down your cards with the highest interest first. These are the cards that will rob you of the most money, so if you can pay these while making only minimum payments on your lower interest cards, you'll get out of debt faster. If your multiple card situation is completely out of hand, consider debt consolidation. Consolidation puts all of your debt into one monthly payment with reduced interest.
Life Crises
Sometimes, emergencies may cause your balance to get out of control, or a traumatic experience makes it difficult to work or pay your bills on time. In most of these instances, especially if you have a decent history of timely payment, your credit card company may be willing to work with you. Sometimes a lender will temporarily reduce your minimum payment, or agree to settle (forgive) part of your loan. If you opt for settlement, it should be a last resort, since this can appear negatively on your credit report for years.
Debt Reduction Techniques
If you're having difficulty repaying your credit card debt, there are many ways to pay down your balance. Start by casting a critical eye on your lifestyle: Do you have expensive items you don't need or never use? Sell some things at a garage sale or online. Cut food costs by eating at home, and cut entertainment expenses by renting movies and visiting the library. Cancel your gym membership, research less expensive housing options, or get a roommate. Work part-time at night or on weekends.
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