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How to Get Rid of Credit Card Debt

by Laura Adams

If you have credit card debt you know it’s expensive. Carrying consumer debt on a high-interest credit card can drain your finances and be the source of a lot of stress.

I read a troubling statistic that over a third of cardholders surveyed don’t even know the interest rate they’re paying on the credit card that they use the most. That’s a real problem when slightly over half of all Americans have credit card debt and the rate could be up to 29.99% or more!

How Much Does Credit Card Debt Really Cost?

Get Out of Credit Card Debt

Are you struggling with credit card debt?

Here’s something to consider: Let’s say you bought a beautiful new mountain bike that was on sale for $1,500. If you charge it to a credit card with 18.9% APR and it takes you a year to pay it off, the purchase really cost over $1,650.

However, if you never make more than the monthly minimum payment, the mountain bike will take over seven years and cost an extra $850 to pay off! Making purchases on a credit card that you can’t pay off right away can turn an awesome deal into a really rotten one.

If you want to crunch the numbers for yourself, there are some great credit card and debt calculators at bankrate.com and dinkytown.com.

Want to see what credit card debt looks like when you add it to the other debts in your life? Check out this article which examines how much interest consumers pay for a variety of loans, including credit cards, mortgages, car payments, and more. It really highlights how expensive loan interest is!

6 Tips to Get Rid of Credit Card Debt

If you’ve made mistakes in the past when it comes to racking up credit card debt, let’s look at how you can turn the situation around.

Here are six tips from my award-winning book, Money Girl’s Smart Moves to Grow Rich that can help you use credit wisely and eliminate your credit card debt as quickly as possible:

Tip #1: Charge only what you can afford to pay each month.

Having plastic in your wallet may seem like an invitation to overspend, but it doesn’t have to be. Millions of people use credit cards every day, but never pay a dime in interest or fees because they pay off their bill in full and on time every month.

Tip #2: Track your credit card charges like a debit card.

A trick to using credit cards responsibly is to deduct each credit charge from your account balance, as if you were making a purchase with a debit card. That keeps you from spending more than you have in the bank and allows you to reap credit card rewards.

Tip #3: Send more than one payment a month.

Instead of making one payment to your credit card company when the bill arrives, send a payment every other week. This is really easy to do when you use online banking and bill pay. Check your credit card balance online and then initiate an e-payment from your bank account. Why does this matter? Credit card companies are required to process your payment the day they receive it, so early payments will incrementally reduce your balance at a quicker rate, reducing the amount of interest you pay.

Tip #4: Don’t spend more if your credit limit increases.

If you’ve been a good customer, your credit card issuer will probably raise your credit limit over time. Never let an increased credit limit tempt you to spend more than you can afford to pay off right away.

Tip #5: Use short-term credit strategically.

When you finance a purchase—like electronics, furniture, or an appliance—with a credit card, make sure that you can repay it in full within a short time frame. As I demonstrated (and I’m sure you already know), the longer it takes you to pay it off, the more the purchase will cost.

Tip #6: Create a repayment plan.

If you’re deep in credit card debt, make a commitment to quit spending on your cards, cut back your expenses, and send more than the minimum payment each month. Doing all three at the same time is a winning combination that will allow you to conquer your debt!

Bonus tip: Transfer your balance to a 0% interest credit card.

Many credit card issuers offer an incentive to consumers to open a new card. While you can’t fight debt by increasing your indebtedness, you can fight debt by strategically using new credit cards. A prime example is opening a 0% balance transfer credit card, which allows you to transfer your existing credit card debt to a credit card with a 0% interest rate. Here is what you need to know to do this wisely: You need a decent credit score for approval, you may have to pay a small fee to transfer your balance (usually around 3%), and these offers have a time limit, usually around a year and a half or so, depending on the issuer. Finally, don’t use this an an excuse to add more debt; use it as an excuse to save hundreds of dollars on interest payments!


Published or updated July 27, 2011.
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{ 5 comments… read them below or add one }

1 KDB

And if you can’t do it yourself, get help. The longer you stay in debt the harder it will be to get out. Most experts advise against using a debt relief company, but some people need someone else to help them get back on the right track, nothing wrong with that.

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2 Helpful Hunny

At the age of 25 I asked my Dad if he thought that I should file for bankruptcy because I was way in over my head with credit card debt and a new car loan. He said that I dug my own grave and it was my responsibility to dig myself out! It was the morally correct thing to do.

The way that I was able to get myself out of debt was by buckling down and strictly limiting my spending. I stopped using the cards all together and only paid in cash or used my debit card. I had to get a second job so I could afford to live and start paying extra towards my credit card balances. I also sold my pretty new convertible and took a financial loss in doing so. Luckily I was given a 1990 Camry by a family member so I did have something good come my way. I do not like old cars but I dealt with it until I was debt free.

So here is my advice:

1) Stop using your credit cards & pay cash
2) Get a second job, if needed
3) Do not splurge on unnecessary items
4) Go food shopping instead of eating or ordering out
5) Make a practical montly budget & stick to it
6) Any extra money that you did not spend in that month should be paid directly toward your debt. There is no point in building a savings account that is paying an insignificant interest rate while you have a balance on a credit card that is charging you an outrageous rate!!!

Be good to yourself. When you are out of debt, I can teach you how to use credit cards to make you money…….. so far this year I am up to $440.00 cash back & have not paid a cent of interest!!!

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3 Helpful Hunny

One more major thing… If you see a promotion for a balance transfer that will give you 0% interest for specified a time period, it may be advantageous to do it IF there is no fee.

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4 Ryan

Thanks for sharing your tips, Helpful Hunny. Those are certainly great ways to get out of debt. Regarding balance transfer cards – they can still be a very good deal, even with a fee. Most credit cards charge in excess of 15-20%, so even paying a 3% balance transfer fee can net a large savings as long as the cardholder makes an effort to pay off the balance as quickly as possible. the added bonus is that the minimum payments should be lower, so if the borrower continues making the same size payment, more money will go toward the principal each month, reducing the time it takes to repay the loan.

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5 Lizzy

I always laugh when I get my credit card bill and read that I can pay the minimum payment of $10 and pay my card off in 5 years for $923 or I can save $111 by paying $22 for 3 years. Then I send the cc company the $615.93 that I spent last month and “save” $307 in interest.

I like tip #2 it’s a good way to not fail tip #1. Great post!

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