Financial Planning for Getting Credit & Eliminating Debt Using Credit Cards

Use this card to help you cut debt.

Use this card to help you cut debt.

The average American carries eight credit cards, and those pieces of plastic can create a heavy debt burden. Credit card interest rates run up to 25 percent and once you get behind it's almost impossible to catch up with minimum monthly payments. A credit card, however, can be your friend in paying off that debt and rebuilding your credit, once you get your spending under control.

Quit Charging

Your first step in getting rid of credit card debt and fixing your credit is to quit charging on credit cards and set a budget to eliminate any unnecessary spending. Figure up your monthly income and calculate the maximum you can put toward paying off credit cards and still keep up your mortgage or rent and other vital bills.


Consolidate your credit card debt. Find the lowest interest card you can which offers no interest on balance transfers for six-to-12 months and move all your balances there. Switch to another free transfer card if you use up that grace period and still don't have your debts paid off. There's no limit to the number of transfers you can make until you are debt-free, but too many transfers can raise a red flag with card companies.

Keep the Cards

Pay off your other card debts with balance transfers but don't cancel the cards. A zero-balance credit card account helps your credit score. Removing an account that's paid off can actually hurt your rating, while an account that's still valid but is paid off will improve it.

Pay Extra

Make more than the minimum payment on your transferred balances every month. Pay as much as you can afford but try to pay at least twice the minimum. Pay promptly -- every late payment will damage your credit score and can cost interest on any new charges. Track your payments to make sure the "free" offer didn't have a hidden trick to charge some interest or fees.

Take Advantage of Cards

Once your credit card balances are eliminated, use your cards wisely. Credit cards are a convenience and can help you track bill payments for income tax calculations and expense monitoring. Take advantage of the credit card "float" to defer payments without interest. For instance, if you charge an item in May, it typically will be on the bill you get in June and you may have until July to pay it. That's essentially an interest-free loan if you pay the June balance promptly.

About the Author

Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.

Photo Credits

  • Hemera Technologies/ Images