Get Rid of Credit Card Debt: Tips for an Impending Recession

There has never been a better time to pay off your credit card debt. Credit card interest rates are skyrocketing with the impending recession. Recessions mean job loss, and the credit card issuing banks fear upcoming loss of payments. Not only are credit card interest rates getting higher, but in the event you lose your job, you don't want to be stuck with more credit card bills than you need.

Consider that if you have a $2,000 balance, adding nothing new to the card and paying minimum monthly payments of 3% at a 20% interest rate, you're looking at 183 payments, over 15 years, totaling $2,241! Wouldn't that $241 be more useful elsewhere?

According to this article on MSN Money Central:

23.8% of American households have no credit cards at all -- no bank cards, no retail cards, nothing.
Another 31.2% of the households the Fed surveyed paid off their most recent credit card bills in full.
So together, the households that owed nothing on credit cards equaled 55% of the total.

Of the households that did carry a balance, the median amount owed was $1,900.

Only 29% of households owe $1,000 or more on their cards.
21% owe $2,000 or more.
6% owe $8,000 or more.
4% owe $10,500 or more.
1% owe $21,400 or more.

Getting rid of credit card debt takes determination and willpower. It's easy to pay the minimum payments for years on end, but it's not the smartest thing to do.

Here's how to get rid of that lingering credit card debt.

Step 1: Create a budget. It's not as terrible as it sounds. Be prepared to be shocked at how much you spend. Get your credit card and bank statements together and look at how much you're spending, and on what. $5 here and $10 there really adds up. Create a budget with the realization that the money coming in should always exceed the money going out. If the outgoing money is more than the incoming money, you've got serious troubles. Determine a reasonable amount to spend monthly for food, gas, rent/mortgage, utilities, toiletries, rare and cheap entertainment, etc. If you're finding this too difficult on your own, you can always pay or find a charity personal finance manager to help you.