Sensible Ways of Managing Credit Card Debt

Credit cards have earned themselves a bad reputation. Or rather - people maging their cards badly have earned credit cards a bad reputation. It is all too common to hear of someone stuck in the hellish cycle of credit card debt, struggling to pay off the balance because of exorbitant interest charges.

Properly managed credit cards can bring benefit to the cardholder in terms of financial stability, membership rewards and the ability to build up a good credit rating for larger limits.

You may have run into credit card debt if you only make the minimum payments on your cards, are struggling to save money, have debt on two or more cards and have received calls concerning your lack of credit card payments or overspending.

Debt is manageable. Being honest with yourself about your debt and finances, will enable you to deal with the problem through sound credit card advice and begin the process of repayment without having to bankrupt yourself. Getting out of debt is not a quick fix however - it involves changing your attitude towards credit and spending for the better.

Rationalise the number of cards in your wallet
The best way to avoid credit card debt is to keep the number of cards in your possession to a minimum. Getting out of debt involves using your cards differently. Dispose of all except one: the card with the lowest debit interest rate (and that suits your life stage best). This will stop you from spending more money on the cards with a higher debit interest rate and is the very beginning to pulling yourself out of the debt cycle.

Make use of a balance transfer
A balance transfer can be used to pay off credit card debt and is perfectly legal. Transferring all outstanding debt onto a card with the lowest interest rate means that you will be paying off existing debt at the lowest rate possible. Most low interest credit cards offer rewards schemes even though the interest they earn will be less.

Organise and Prioritise your debt
Prioritising your debt eases credit card debt using a snowball effect. It works through listing the outstanding balances on each card and dividing that amount by the minimum payment for that card. Rank the resulting numbers from lowest to highest, the lowest of which is the first account you need to pay off.

Pay as much as you can towards the card with the lowest number calculated and make the minimum payments on all other cards. Once the first card is paid off, move onto the card which is next in rank. You can keep the account open of every card which has been paid off in full to build a good credit rating, but do not begin to spend more money on the card now that you have paid off the balance.

Another method of paying off credit card debt is to prioritise your debt. Paying off the cards with the highest interest rate before the low interest rate cards will save you a lot of money in over a long period of time, but is far more difficult to do than paying off the low interest cards first, and will only work for the very disciplined. If you know you are regularly guilty of missing payments or other credit misdemeanours, pay off cards with a lower interest rate first instead of prioritising higher card payments. If you prioritise high interest cards and do not complete payments you will find yourself in more debt than you began with.

Talk to your Credit Card Company
If you are struggling to pay off your credit cards, speak to your credit card issuer. It is in their best interest to help you. It will increase the chance that their money is repaid.  Negotiate interest rates and minimum payments with your provider. Making a feasible payment plan with your credit card company shows good faith and a commitment to paying their money back.

Credit card debt is extremely common and whilst it is serious, it is best to remain calm and approach repayments logically. Common sense, vigilance, awareness and asking for help are key aspects of saving yourself from drowning in credit card debt.