How to Manage and Eliminate Credit Card Debt

An essential part of winning the overall war of personal finance is to manage and eliminate credit card debt. Invest the time in managing your credit card debt, and you'll reap significant financial rewards. Not only will you learn to manage that debt, you'll take steps towards eliminating that debt as well.

Here's the biggest secret of managing credit card debt: Never charge more than you can pay off in a reasonable amount of time. It's easy to swipe the card for products and services without considering how much debt you are racking up. You're not the first person who was shocked by the sky-high bill on a credit card bill at the end of the month. If you find yourself struggling with managing your credit card debt, consider putting the card in a drawer and using it only for large, deliberate purchases until you've caught up on your payments.

Another strategy for managing credit card debt is to review your monthly statement and highlight expenses you regret charging. Make the choice to be aware of how much you're charging each month. Evaluate your charges, and make decisions based on how you feel at the end of the month when you're paying for all those purchases at once.

Make all your payments on time
Credit card companies are notorious for charging high late fees. Even if you are in a tough spot financially, you can save a great deal just by making those payments on time and saving yourself the late fees.

Realize the credit card companies are banking on you making late payments and carrying a balance. This is how the credit card companies make money. Managing your credit card debt wisely includes making sure you pay down as much balance as you can every month. If you carry a high balance and you're having a difficult time managing your credit card debt, calculate out how much of your hard-earned money is going toward interest. This knowledge may motivate you to limit your credit card expenses and catch up on those payments.

Shop around for the right credit card
By comparing interest rates, fees and credit limits, you can quickly determine which card offers the best deal for your situation. Once you have a card, don't stop looking. It's good to evaluate your credit card situation every six months or so, looking to see if you can get a better card with a lower interest rate and higher credit limits. If you're successfully managing your credit card debt (making the monthly payments on time and paying down most or all of the balance each month), you'll find yourself eligible for better and better credit opportunities. Take advantage of these rewards for good credit card management and save big on interest.

Use zero-percent and low-interest credit cards with caution. Keep in mind that these low-interest credit cards usually change their rates after a short period of time, so read the fine print carefully and mark your calendar when the rate changes. Make sure you will not be penalized for transferring the balance to another card if the new interest rate is going to be higher than the rate on credit cards you already hold. If there's a penalty, don't sign up for the card.

Playing the low-interest credit card game requires a whole different level of credit card debt management. While it can be a good solution if you are carrying a high balance and need a break from paying interest for a while, you need to plan out what you will do when the teaser interest rate period is over. If you have a good plan for managing your credit card debt, you will hopefully pay off the balance before the teaser rate period is up, or you'll be able to transfer your credit card debt to avoid the higher interest rate.

Be careful not to max out your credit cards, or it will negatively affect your credit score on your credit report. It's better to have several credit cards and spread out the debt evenly between them than to max out one card. This credit card debt management strategy plays on the way credit bureaus and creditors view debt. If you max out a card, it looks like you need to use every bit of credit you can get. If you have some leeway on each credit card, it appears that you are managing your available credit. This causes creditors to view you in a more favorable light.

Raise your credit limits on your credit cards when you can, but don't increase your spending to any more than half of the limit available. This strategy for managing credit card debt makes you appear most appealing to creditors, which may lead to better credit opportunities in other areas such as mortgage rates, auto loans and car insurance. Every creditor wants to lend to a debtor who is successfully managing their credit card debt.

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