I for one believe that credit card debt should be as small a portion of your overall debt as possible. It’s incredibly wasteful, money-wise, to carry any substantial credit card balances. They suck the life out of any budget, make it difficult to save, and seem to hang on forever. But how can you eliminate them?
Of course, you can do it the old-fashioned way and stop using the cards altogether and throw extra money at your monthly payments. Apart from being easy to understand, it’s probably the most long-term effective method you could use. Getting out of the “plastic” habit can be life changing. You learn how to move through your days without spending much cash on frivolous things. In fact, you can actually get used to using no cash at all. Unfortunately, there are lots of people who aren’t in a financial position to take this approach to eliminating their credit card debt. They need some alternatives.
One alternative is to speak with a customer service rep at your credit card company. Tell them the truth about your financial hardship and simply ask them to help you out. You’d be surprised at the actual help you might get. These companies have the power to postpone your payments for a time to help you get back on your feet. They also can lower your interest rate and maybe even your monthly payment to help you out. Of course any of these techniques will increase your total payback and lengthen your payback period, but that can be an acceptable alternative if you need a little time to get your financial bearings.
Another way to reduce your debt is to meet with a reputable credit counseling representative. There are non-profit organizations out there that can work out repayment plans for you with your credit card companies and other creditors. They have established relationships with many creditors and do this kind of thing every day. They get reimbursed by those creditors and also by you as each repayment agreement usually includes a small monthly fee to them. Sometimes these guys can be life-savers.
Eliminating debt is not easy. It also doesn’t happen overnight – it takes months if not years to dig out of a financial hole. And you need to make behavioral changes in order to stay out of debt. Changes like actively managing a personal budget, switching to prepaid debit cards instead of credit cards, and only buying things you’ve saved up for instead of buying things on credit. It can be a long road, but it sure is a worthwhile trip.