Credit card debt is a major problem in the U.S these days. Statistics reveal that personal bankruptcy rates have increased tremendously and every family in the US carries almost $8000 credit card debt on an average. Credit card debt can get on your nerves and can very well turn you bankrupt. So you need to know how to tackle the situation before it is too late. Here are a few tips which would help you to get out of credit card debt before the situation gets out of control:
1. Firstly, you should try to make sure that you don't carry excessive number of credit cards. If possible, carry just a single credit card. More cards would definitely lead to more spending. Remember that credit cards make you feel you feel that you have a lot of money while the situation is actually something different.
2. Avoid high interest credit cards altogether. Try to transfer your balance from high interest cards to low interest ones. You can consider consolidating your credit card debt and make a single monthly payment to your creditors. However, you should not close all your credit cards together because this can have a negative impact on your credit score.
3. If you choose to consolidate your credit card debt then consider making a bigger monthly payment. If possible, double the monthly payment. Debt consolidation is usually a long term process. So you end up paying more on interest even if the interest rate is low. If you increase the payment amount then you can pay off the debt faster and you would have to pay less on interest.
4. You can consider using debt snowball method. Devised by Dave Ramsey, this debt elimination method requires you to make a list of all your debt from the highest to the lowest. You should make minimum payments on all your debts but focus most on your smallest debt. Pay as much as you can to pay off the smallest debt. Once that debt is cleared, move on to the next smallest debt. Since one of your debt is paid off, you have some extra money. Use this money on your next debt. Continue this way till your your debts are paid off.
5. You can also choose to pay off the card with the highest interest rate. This is mathematically more appealing since you save more money on interest. But if your highest interest debt is also your biggest loan then it might take some time to get rid of it. So you need to be a lot of patience and discipline if you opt for this method.
Apart from the above mentioned tips you should also keep the following things in mind to avoid falling in credit card debt in the first place:
Try to embrace budgeting. There is no better way to understand your finances and control your expenditure than budgeting.
Make sure that you have an emergency fund. It is your safety net against all kinds of expenses that come up without notice.
Finally, stay away from credit cards. They are a nice way to invite debt.
Remember the above points and you will get out of credit card debt in no time.