To play off that cliche' about how guns don't kill people, people kill people, credit cards don't drive people deep into debt, but they sure do make it easy for people to get there.
Credit card debt has become the bane of the American consumer's existence. As hard as we try, it seems that getting completely out from under credit card debt is extremely difficult.
It doesn't help that credit card companies will do everything they can to keep you from paying off that balance. After all, the interest rate they get to charge when you don't is a large portion of their revenue, along with what they charge business to use their cards.
Catch 22
Not many people know this and the credit card companies have done a great job keeping it secret, but they regard people who pay off their credit card bills each month and never carry a balance as "deadbeats."
At the same time, if you carry too much debt or make a late payment, your credit score goes down and credit card companies will use that as a way to penalize you by raising your interest rates. How's that for a mixed message?
Sooner or later, you'll say you've had enough and decide that it's finally time to do something about your credit card debt to get away from all those late fees and finance charges, and say no more to all those hefty transfer fees to cards with introductory low interest rates that eventually climb back up.
Cutting the cord
If that's where you are, here are some relatively easy ways of finally paying off that credit card debut.
- First, you have to change the way you think about credit cards. No, they're not an easy access to free money. Thinking like that is what got you in trouble to begin with. Credit cards are merely tools -- tools of convenience and should be considered as such.
- Second, you have to put those cards away and be real. And by "being real," we mean you have to not buy something you really can't afford. You'll never be able to pay off your debt if you keep adding to it. If this is too difficult and you fall into that category of consumer-holic unable to stop spending, then you have to take a more severe approach. Cut up your credit cards. If you don't have them you can't use them.
Now if you do have a serious problem, you can expect a form of withdrawal to take place, for which you may need to seek out a Debtor's Anonymous meeting or even a therapist. If "not spending" makes you ill, then it's time to admit you have a problem and you have to deal with it.
- Step three, now that you've curbed your excessive spending, you need to create a budget or a spending review. This will give you an idea where the money goes every month. When you stop the compulsive spending you should have some extra money that you can use to make larger payments to your credit card bills. If you continue to pay the minimums you'll never pay the balance off.
- Step four: start paying off your credit card debt by paying off the highest interest rate card first. Some people will say they'd rather pay off the lowest balance because it gives them a sense of accomplishment. That's fine, but paying down the higher interest rate card first is still the best solution financially.
This step of paying down debt could take a while, but that's okay because it will also be teaching you a new way of living. Once you pay off those last balances, you will enter a special group of Americans, that rare breed of sensible consumers who live within their means and carry no credit card debt.
Yes, the card companies will call you a deadbeat behind your back, and they'll inundate you with offers of easy access to "free money." But you beat them and you can rest assured that you will feel a lot better about yourself, not to mention your glowing credit score if you continue to resist their temptation and not slide back into that deep well of debt.
