All across the country, couples' paychecks are being swallowed by credit card debt. Don't let yours be one of them. Paying just the minimum payments could take years and cost hefty sums of interest. Fortunately, there are steps you and your other half can take to eliminate credit card debt faster and save hundreds or even thousands of dollars in interest payments. To be successful, you will need a plan you can stick to and a commitment to avoid racking up new debt once you get your credit card bills under control.
Gather all of your credit card statement, and make a list or spreadsheet that details each credit card company's name and contact information, the interest rate you pay for each card, the amounts you owe on each account and your minimum payments.
Calculate the total amount you owe in credit card debt. You cannot devise a good plan if you don't have an accurate idea of how much you owe.
Total the minimum payments you have to make each month for all of your cards. The number you come up with is the minimum you have to pay to keep your accounts in good standing. You will have to pay more to put a real dent in your credit card debt.
Call each credit card company on your list and ask for a lower interest rate. Your creditors may not agree, but if they do, a higher percentage of your payments can go towards the principal you owe.
Take advantage of balance-transfer offers to get lower interest rates. The lower your interest rate, the more of your hard-earned money can go towards your debt. Some credit card companies even offer 0-percent interest rates on balance transfers. Such a deal will allow your entire payment to go towards your debt for as long as the 0-percent interest remains effective.
Decide how much extra you can apply to paying off your credit card debt each month. Look for unnecessary expenses you can cut to free more cash for debt reduction. For example, you may make your daily latte at home to save money or limit your romantic dinners out to once a month rather than once a week. Even little things like brown-bagging your lunch and getting rid of a few premium cable channels may help you put more money towards debt reduction.
Pay off the credit card with the highest interest rate first while paying the minimum on all of your other cards. Each month, pay the minimum payment and as much extra as you can afford on the high-interest card. You can start on the card with the next highest interest rate once this card is paid off.
Seek help from a debt-relief company or credit counselor if your credit card debt is out of hand and you are unable to negotiate payment arrangements on your own. A debt-relief organization can help you negotiate payment arrangements and settlements.
- Consider your decision to pay off a credit card and close the account carefully before you move forward. Your credit score may take a hit when you close an account, despite the fact that you are acting responsibly. Instead, you may do better to pay off your credit card debt but keep the cards open.
- Contact credit card companies and ask for payment arrangements if you are having trouble keeping up with your bills. Most companies would rather negotiate with you than have you default.
- If you want to carry a small balance on your credit cards, make sure it amounts to 30 percent of your limit or less. This is healthiest for your credit rating.
- Once you've tackled your credit card debt, put your credit cards away but use them every few months or so. This helps to ensure that your creditors continue to update your credit report, which helps keep your credit score in a good range. Pay the bills in full each month to avoid accumulating more debt.
- Jupiterimages/Comstock/Getty Images
- Credit Card Debt Reduction Plan
- Canceling or Reducing a Credit Card
- How to Create Debt Goal Chart
- How to Reduce Minimum Payments on Credit Cards
- Software for Managing Credit Card Debt
- How do I Handle Short Term Debt?
- The Strengths and Weaknesses of Paying the Minimum Amount on a Credit Card Balance
- Top 8 Things to Know About Controlling Debt