Credit Card Debt - Please Go Away!

America's love affair with the credit card has led to debt problems for many families. Between bank cards, retailer cards, cash back cards and debit cards the average family has seven to nine cards. The average debt is in excess of $5,000 and the balance is being carried at a 10% plus rate. This a formula for personal financial disaster that none of us want.

Families did not get into this debt overnight and it will not go away overnight. Most people start out with one card and then we have ten! To gain control over this problem we need to take one step at a time.

The first step is to evaluate your credit cards.

-What cards do you really need?

-What cards have the best benefits?

-What cards are used for necessities?

-What cards are used for extras?

-What cards have the lowest APR?

-What do you charge that could be paid for with cash?

An honest evaluation should allow you pare down to two or three cards that suit your family the best. Set the card[s] aside that you need and take the scissors to the rest. Call those companies to terminate your account

Paying down the balances will take time and discipline. Remember that it took time to get into this situation. Minimum payments on this debt will never give you relief. Consider paying 10% of the total balance for starters. That means it will take about one year to pay off the balance. If you have an extremely large balance you may want to consider a debt consolidation loan from your local banker. The interest rate should be lower than your APR and you will only have one check to write.

Another option is to get a balance transfer credit card. Many issuers offer a 0% introduction rate for up to 12 months. This is basically an interest free loan and will save a lot of money on interest payments. Do not use this card for new purchases because there will be interest charged on new purchases.

Use your remaining card[s] strictly for goods and services in your normal monthly budget. Prioritize your monthly budget and put the credit card payment as the number two on the list, right behind the mortgage/rent payment. The discipline you exercise will be rewarded with reduced debt and an improved credit score. You can benefit by applying for a 0% transfer credit card.