Credit Card Debt Tips

Sometimes it seems as though you just can't get ahead. But whether you're doing well or barely making ends meet, it's smart to get rid of your credit card debt so that you can start using your money for things that are more likely to benefit you, like investments. While getting rid of your debt is a matter of spending far less than you earn, a few tricks can help make it easier.

Interest Rates

The higher your interest rates, the harder it is to pay off your credit card debt. You can significantly shorten the amount of time it takes you to pay off debt by lowering your interest rate. Call your credit card company and ask the agent to lower the rates -- many agents will. If the company doesn't want to work with you, seek out credit card offers with low or zero-percent introductory rates on balance transfers. You can then aggressively work to pay off greater percentages of the principal debt.

Consolidation

Debt consolidation is the answer for some. When you consolidate your debt, you take out one loan to pay off all the other loans. This works well if you have so many different cards that you sometimes forget to send a payment in on time, resulting in hefty late fees. Additionally, this can be a way to lower interest rates. Beware, however, of consolidating by taking out a home equity loan -- which, unlike credit card debt, is secured debt. You could lose your home if you aren't able to repay the loan.

What to Pay Off

When you have several credit cards, it's hard to choose which one to pay off. You might pay equal amounts on each debt, but this isn't the smartest move. Instead, focus on the debt with the highest interest rate. Pay any extra money you have on that one. Once you've finished paying it, use the extra money to pay off each debt in the same way.

Budgeting

If you honestly feel like you have no extra money to pay off your debts, take a closer look at your finances. Track your monthly spending habits. By understanding where your money is going, you are able to see where you can make changes to save money. For example, a candy bar from the vending machine each day may not seem like a lot, but it adds up to about $25 a month. That's money you could be putting towards debt.

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