Who wouldn’t want to wipe out credit card debt? Many people find themselves in the situation where their credit card debts have crept up to such a high level that it’s hard for them to see how they’ll ever pay off what they owe. They never meant for this to happen; it’s just that it seemed so easy at the time to put first one, then another sizable purchase on the card.
Before you know it, there’s a hefty pile of debt built up and the monthly interest charges alone are enough to bring you out in a sweat.
If this is a scenario you recognize, you’re probably feeling overwhelmed by your circumstances. But by taking control of your situation sooner rather than later, there is a great deal you can do.
How to Wipe Out Credit Card Debt
Step 1: One of the ways in which you can give yourself a bit of breathing space is to get yourself a balance transfer credit card. Many of these give you an introductory period during which they charge 0% interest.
By transferring your existing high interest debt on to one of these, you can start to pay off the balance rather than just the interest, but make sure you do use this opportunity to reduce your debt, rather than adding to it.
Step 2: It’s tough, but you’re going to have to face up to the situation you’re in. That means working out exactly how much you owe to credit card providers and what the rates of interest are on each of your cards.
Also, you should calculate the essential outgoings you have such as mortgage repayments or rent, loan repayments, utility bills, food, insurance payments and the cost of getting to work. In other words, the things that you simply have to pay each month whether you like it or not.
Take the total of essential spending away from your income and what you’re left with is your discretionary spending. From this you may be able to afford a few little luxuries, but you also need to use it to pay back as much of your credit card debt as you can.
Step 3: Good communication is often the key to keeping your head above water. If you are struggling to pay even the monthly minimum on your cards, get on the phone to the provider and come clean with them.
Explain the situation calmly and clearly. You want to get over to them that you are a responsible person and you’re trying to sort things out.
They may take some convincing, but there is a chance they will agree to reduce your minimum payments, or even give you a more favorable interest rate, especially if you tell them you’re looking at transferring to another provider.
Step 4: You need to prioritize which debts to target for clearing first. Earlier, we mentioned taking a note of the exact interest rates you’re being charged on each of your cards.
While you should always make sure to pay off the minimum monthly amount on ALL your cards, any extra that you can pay off should be directed towards the card that’s charging the highest rate of interest.
Step 5: Be very careful about getting into seemingly ‘easy fix’ arrangements with debt settlement companies. Many of these are scams that could add to your problems.
The Federal Trade Commission advises that debt settlement companies cannot offer any guarantees that they will be able to negotiate on your behalf with a credit card company. While you’re waiting for them to sort things out, which may take months, you will still have to continue with your payments, otherwise you risk extra interest and penalties for late payment.
Getting out of credit card debt is never going to be easy. But take responsibility, keep focused and level headed and the way to a debt-free future is open to you. You can do it! Wipe out credit card debt starting today with these 5 helpful steps.
Article by Sam at MoneySupermarket, the UK’s number one credit card comparison website, visit http://www.moneysupermarket.com/credit-cards/ to see the most competitve interest rates.
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