All you wanted to do was buy a few nice things for yourself: clothing, electronics, entertainment. Suddenly, you feel like you are drowning in credit card debt and don’t know where to begin to reign in the raging dragon.
First of all, know that you are not alone. Millions of people have been in the same situation you are in now and have managed to get out – you can too. Also realize that the credit card companies don’t want you to go bankrupt. They want you to pay them back, so it’s in their interest to help you.
Stop Using Your Cards
The first thing to do is to STOP USING YOUR CARDS. This may seem like a drastic step, but it’s possible. Give them to a friend or better yet – destroy them. You won’t die. You may also want to take a good hard look at your expenses and make a list of essentials and luxuries. Design on a plan to gradually (or immediately) cut out luxuries until the debt stops growing. Alternatively stop buying the little things like books, movies, snacks, newspapers and only buy the essentials. This will stop the beast from growing. To kill it, use one of the four following options.
Begin paying off the card with the highest APR (Annual Percentage Rate). If you don’t know the rate of your cards, call the credit card company and ask them. This only works however if you can manage to pay back the debt and not just the interest on the debt. If you can’t, it’s better to start with a card where you can eliminate or reduce the actual debt.
A second method is to try and consolidate all your debt onto the card with the lowest APR. To do this, however, you must first take a good look at the balance transfer rate of the destination card or you could end up actually paying more.
The third option is similar. Look for a low interest loan, that is a loan with lower interest than what you are paying on your cards, and use it to pay off all your credit card debt. Then work on paying off the loan itself.
If your situation is not that dire, then check the balance and pledge to pay back 50% each month. By seven months you should have managed to eliminate the debt. This method works if your credit card company allows you to pay back more than the minimum. Most companies allow this, but some smaller ones may forbid it, so check here too.
For all these methods, make use of a debt calculator to help you calculate your debt payments. You can find some online. The important thing is not to panic. Choose a plan of action and get to work. Before you know it, you will be back on your feet – debt free!