Consolidating Credit Card Debt

Many people are trying to find a way to get their debt under control and there are a number of solutions that are available. It is important to realize that not the same solution for consolidating credit card debt will work for everyone. Some people have a lot of debt and some people don’t have much debt. They are just looking for a way to get it paid off. Some people have debt that they have been able to keep current and others have not made payments in many months. Some people have very good capacity for repayment and others do not. All of these things will help you determine a method for repaying your debt.

The most desirable methods for repaying credit card debt are to do it on your own or to use a nonprofit debt consolidation company.

Repaying your debt on your own is the best option, if you can afford to do it this way. The plan is simple. It is finding the extra money to escalate the repayment of your credit cards that will most likely present the biggest challenge. To begin, list all you consumer credit card accounts. Include the balance, the minimum payment amount, the due date and the interest rate. There are two ways to determine which account you should pay off first. Some say pay the account with the lowest balance first to get the feeling of accomplishment. This account will be paid off the quickest leaving you with less accounts to manage. Others say that you should choose the account with the highest interest rate to target first for repayment.

At the end of the day, I don’t think it is all that important which account you choose to target first for repayment. The important thing is that you pick an account and get started. Now it is time to save some money. Call all of your credit card companies and ask them to lower your interest rates. If you let these companies know that there is a potential that you may not be able to continue making payments as agreed without them lowering your interest rates, many of the major credit card companies will reduce your interest rates. Your luck at reducing your interest rates on store cards may not be as good.

Normally, store cards have smaller balances and you may be able to transfer the balances to a card that has a lower interest rate. Make minimum payments on all of the accounts on your list except for the account that you have chosen to target. You should make this same payment amount on these accounts each month until they become your target account. On the account you have chosen to target, pay as much as you can possibly afford to pay on this account. Get creative and find ways of being able to decrease your expenses and come up with extra money. Find things to sell that you do not need or are not using. Find ways to increase your income each month. Even if it is only a small amount, it will add up over time.

Once your target account is paid in full, select another account to target and repeat the above process. Hopefully, you can have all of your accounts paid in full in 3 years or less. If you feel that you cannot follow this process without help, you may want to consider contacting a nonprofit credit counseling company. They can assist by helping you organize the same procedure. The big benefit to using a credit counseling service is that they will work with your credit card companies to get your interest rates reduced and you will make only one payment to them each month. The debt management company will disburse your payment to your lenders.

These are both excellent options and should have to debt free in five years or less. Nothing feels better than debt freedom. If you have debt, today is the day to get organized and begin aggressively developing a debt management plan.