Like many Americans, you may at some point in your life find yourself swamped in credit card debt, living from paycheck to paycheck and barely making your minimum payments. With interest rates as high as 20%, its not hard to find yourself overburdened by debt before you know it. How do you get out of debt? Dont despair - there are many ways to pay off your credit card debt without declaring bankruptcy and many resources available to you.
The first step to any debt management plan is to get a realistic idea of how much you can afford to pay off, and what your monthly expenses are. Many people have only a vague idea of how much they spend every month. Reputable credit counseling organizations can help you to start tracking your expenses, develop a budget, and pay off your credit card debt.
Next, take a look at your credit cards and form a plan of action. Which cards will you pay off first? Most experts believe that the best way to get rid of debt is to attack the card with the highest APR before moving on to the lower interest credit cards. If you are carrying a high balance on high interest credit cards, you will naturally want to get rid of that first, since high interest payments will be compounded to your debt monthly. Of course, if you can easily pay off a low balance and get rid of the card entirely, that may give you more satisfaction in the short run.
If you cant pay off the high interest credit card debt immediately, the next best thing would be to transfer your debt to a low interest credit card. At least with a balance transfer, you will lower your interest payments and not accumulate credit card debt as quickly.
In any case, you will want to pay two to four times the minimum payments in order to pay off your credit card debt. When one card is paid off, you can move on to the next one until your credit card debt is erased.
Another option is to consolidate your credit card debt. This can sometimes be an option that works for homeowners who are able to take on a second mortgage or home equity loan. However, if you dont make your payments on time, you may risk losing your home.
