Cancel Credit Card Debt

In financial terms, a credit card can be your best friend or your worst enemy. Debt can be painful, and minimizing that pain should be your number one goal. Thankfully, there are time-tested ways to pay down your credit cards and improve your credit scores. Here are 4 keys to success.

First Key - Get agreement from your Significant Other: Trying fervently to pay down debt while your girlfriend, boyfriend or spouse continues to spend, spend, spend is like trying to fill up your tub with the drain plug pulled out. Be sure to have an important talk or two with your significant other concerning your plans for paying down your credit card debt. Getting their buy-in is a crucial step in making your plan work.

Second Key - Close the accounts of your higher-interest cards: If you have more than 3 or 4 credit cards, transfer the balances from your higher interest cards to your lower interest cards. Then, as you pay off your cards, start closing out your higher interest accounts. Caution: be careful not to close too many accounts too quickly, especially if you have very high credit card debt across all accounts.

Third Key - Use only one credit card actively: By continuing to make small charges on one of your cards and then paying down the balance each month, you are demonstrating to your lenders that you can handle your debts. However, 80% of your monthly expenses should be paid in cash only.

This will get you into the practice of only spending what you have. Fourth Key - Stick to a monthly budget: Pay your monthly expenses following a strict budget. Then, I suggest setting up an automatic payment each month for your higher-interest credit cards. Have the payment be deducted from your account each month on the day after you get paid. Doing this, you are really paying yourself first each month, before paying your other expenses. You are in effect investing in the 'future you' by eliminating his or her debt, bit by bit.

There are many people who are stuck with credit card debt before, but have bounced back already. 1. First, put away all of your credit cards. Don't be tempted to use them for your expenses. Instead, use cash for your current expenses. If your credit cards have gotten you into your debt problem, then don't worsen the problem by using them more. 2. Compute your monthly payments, then make a budget plan for your credit card debt. Listing down your daily expenses and your monthly payments for each credit card will make you know how much you will have remaining.

The remaining money can be used for paying off the debt or for unexpected expenses. 3. Prioritize. Know your "shoulds" and your "wants". Paying off debts incurred from credit cards should fall under "shoulds", because it's extremely necessary. While you should still prioritize household expenses, such as food, water, and electricity, you should reduce your recreation and your other unnecessary luxuries.

4. Try to add to your monthly income. As for the ways, there are many. Go get a second job. Do some freelance tasks during your free time. Try to sell some of your things (preferably online on the different auction sites out there). Be responsible enough to recognize that credit card debt is a major problem and do something about it fast. 5. Try consolidating your remaining debts.

Debt consolidation is the gathering of many loans into a single loan that you will pay off each month. Consolidating your debts on your credit cards will make handling the monthly payments easier because you have only just one debt to mind. 6. Perhaps you can try asking for money from others for the meantime. You can ask for money from your friends, family, relatives, or other people whom you trust.

These people won't impose high interest rates if you borrow from them, so you have an advantage. However, you should pay them back as soon as you can. 7. Well, ask your creditors for help. Your creditors wouldn't want you to declare bankruptcy out of the blue. They will take steps to help you pay down your debt quickly. They can offer lower monthly payments, reduced interest rates, or other setups to your benefit. Of course, when it comes to credit card debt, it is better to avoid it than to pay it off once you have it. Don't rely too much on credit cards; use them only on emergencies or if you are responsible enough in handling them.