Reducing Your Credit Card Debt: 3 Easy Steps that Actually Work

Get Control of Your Credit Card Debt the Right Way

So you woke up one day and suddenly became inspired to pay off all of your credit card debt, right? OK, so for most of us the realization comes with the call of debt collectors and money being sucked away by simply paying minimums. Where credit card debt is concerned, the most common response is to simply put it off or ignore the issue all together. That path leads to forgotten payment, late fees, higher interest rates and additional credit card debt to wrangle. Quite the opposite of what anyone needs.

The first step is genuine desire to pay it down, the second step is taking action. Unfortunately, whether you owe $5,000 or $50,000, reducing your credit card debt is a long and tedious process. However, it is not impossible. When you are finally ready to face the demons, you must have a plan.

1. Get a list of ALL of your accounts, their balances and interest rates.

It is amazing to me how many people have no idea how much they really owe. Your $10,000 in credit card debt could actually be $15,000. Either write it down or put it in a spread sheet, but get it stored somewhere. You need to get a complete list of all credit card accounts, their balances and interest rates. From there, add up the totals so you are absolutely sure how much you owe. This can be a frightening first step, but it is a necessary one to tackle your credit card debt.

2. Cut 'em, Don't close 'em!

While this can be a controversial suggestion, I say do NOT close your accounts. Rather, cut up all but one card. That card is to be used for emergencies only. Why not close your accounts? It comes down to something called debt to available credit. If you close accounts that have credit available, your ratio of credit used to credit available goes down and that sends your credit score plummeting. It may seem like you have too many accounts open, but closing them will most likely do more harm than good. So get out those scissors and start cuttin!

3. Develop a payment strategy and stick with it