The Easiest Way to Lower Your Credit Card Debt

The national credit card debt problem, enthusiastically cheered on by the credit card companies, has exploded into a completely out of control catastrophe. Having happily added on every sort of fee that they possibly could - late fees, pre-payment fees, over-limit fees, and so on - they're suddenly surprised and shocked that many credit card holders have fallen behind in their payments.

As a matter of fact, the credit card corporations were apparently so surprised by this state of affairs that they charged off over 5 percent of their debt - billions of dollars - this past December. Now, it appears, they are getting a taste of their own medicine, as they begin to default on their own debt obligations and try to get help from Washington, D.C..

Regrettably, although we might feel pleasure at seeing the corporations suffer some, this doesn't help the millions of credit card holders who have over extended themselves and are struggling to pay their credit card bills. So, if you're in credit card debt, what should you go?

The first thing you need to do is to face the music and take stock of your current credit card debt situation. Take all of your credit card statements, lay them on the table. On a piece of paper or in a spreadsheet, write down the account name, account phone number, and the total amount owed on that credit card. Then sum all of the amounts. This is your total credit card debt. If you're like many people, the amount may surprise you. But at least now that your conscious mind has been forced to take notice of the debt, you can begin the process of putting together a plan to pay it off.

On your sheet of paper, adjacent to each account name and dollar amount, write down the annual interest rate, followed by the minimum monthly payment. Contact each card company and attempt to negotiate a lower percentage interest payment. If you have good credit, this most likely will not be a problem. If you have so-so credit, but have been relatively consistent in making your payments, you can probably get a better rate as well. If you have poor credit, they may not offer you a better deal, but it never hurts to try. On your sheet of paper, replace the old interest rate with whatever new rate that you managed to negotiate.

Now, you're going to hit the phones again. But first order the account names, top to bottom, by annual interest rate with the card having the lowest interest rate on top. Then working your way down the list, call each credit card company and determine if you can transfer the balance from another credit card to them - and, of course, you'll want to retain the low interest rate. If they will allow you to transfer it, transfer the largest dollar amount that you can from the bottom card on your list. Continue down the list, calling each credit card company, until you have reallocated your credit card debt into the accounts most beneficial to you.

As the final step, start to pay off your debt. Re-order you list again, from top to bottom. This time, however, sort the list so that the credit cards with the highest interest rate is on top. Every month, as you pay your credit card bills, pay the minimum monthly amount on every card except the first one. On that one card - overpay the minimum amount. Overpay as much as you possibly can and continue to do so each month until the debt is paid. At that point, continue on to the second card, then the third card, and so on - and do the same. Eventually, if you keep at it, and if you can manage to keep yourself from adding new debt to your credit card, your debt will magically have disappeared.

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