How to handle credit card debt?

5436991_s-300x194Most people have credit cards.  Why?  It is good for your credit score, they come in handy, and credit card reward programs can be pretty awesome.  The problem with credit cards is knowing how to pay them off before they creep up on you and cause financial catastrophe.

How to handle credit card debt

There are two things that will not help you resolve your credit card debt.  First, making the minimum monthly payment is just not going to cut it.  Second, if you have multiple credit cards and you are make a little more than the minimum payment on all of them, that is not going to get you very far either.

If you are able to make on-time monthly payments:

Debt Consolidation.  This usually means one of three things.

  1. Getting a loan (usually a mortgage) to pay off all your credit cards; or
  2. Paying a debt consolidation company instead of the credit card companies and they allocate who gets paid what; or
  3. Asking your financial planner to help you reduce your debt- they have pretty awesome software to generate a very specific plan (bonus- this is a FREE service).

 DIY Strategy:

1.  Make a list of all your credit cards and add the following information:

  • The balance;
  • The minimum payment; and
  • The interest rate.

Once you have done this, take a minute to absorb the information then ask yourself- how much debt do I have, how many credit cards do I have, can I really pay all this off?

If you are completely overwhelmed then get help from a professional.  Don’t let fear freeze you up, it is okay to be freaked out, but it is not okay to give up.  You can do it!

2.  Determine how much money you can pay each month for your credit card debt.  If there is money beyond the minimum payments, then keep going with this plan, if not get professional help.

3.  PSC

  • Prioritize- find a card that you can actually pay off within 6 months.
  • Stop the bleeding- stop using the cards, do not close the accounts.
  • Create a plan- figure out how much extra money you can pay to the one card while making your other minimum payments, and stick to the plan.
  • Repeat PSC – but use the money you were paying to the card you just paid off and apply it to the next priority.  This snowballing effect is the key to success.

Note: If you cannot pay off your credit cards within a few years using this strategy, then try to find additional income – aka get a second job or reduce items in your budget. If this is not an option, try consulting with a professional to help you.

Arizona Credit Law Group, PLLC is a law firm helping with those in Financial debt,
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My firm has 3 goals – be cost effective & efficient, make complicated things simple, and change the way people think about attorneys. We do this by offering flat rates with payment plans, educating our clients, and by encouraging everyone to ask us questions to better understand what we do & why we do it. I am a credit attorney and I love helping people with debt and credit legal issues.

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