Effective Credit Card Debt Advice On How To Eliminate Credit Card Debt Legally

How to eliminate credit card debt advice is sought by many in the industrialized nations especially USA as they get deeper and deeper into credit card debt which amounts to 962 billion in USA alone.

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Though credit cards have many benefits, it has also become a major contributor for the increase in personal debt for people who live beyond their means due to the consumer culture pervading the developed nations.

Due to the ease of use, credit cards have become a necessity rather than a luxury. Almost every one has at least one credit card and many have more than two. The problem with credit cards are that they are unsecured debts hence have higher interest rates(up to 36% per year) compared to secured debts. Normally credit cards are used for buying almost anything and if you do not pay the whole borrowed amount within the stipulated grace period(normally 25 days) after the credit card bill is issued , high rate of interest is charged. This keeps adding up due to the cumulative effect which over a period of time can get you into heavy debt. If you do not have control over your spending habits and if you are not regular in repayment of credit card bills, you may soon find yourself facing the problem of credit card debt.

If you find yourself in such a situation, do not lose heart . Stop blaming yourself for the situation you are in but concentrate on how to solve it. This problem can be overcome with firm determination and planning. The main thing is to have control on your spending. There are certain steps you must take if you want to get out of credit card debt. These are time tested tips which many have used successfully. You must be ready to take certain difficult steps for the difficult situation of credit card debt.

The most important step is your determination and willingness to solve thisproblem. Keep repeating to yourself that you can successfully solve this problem. You must develop ample self confidence to cope with this issue. This problem is not unique to you alone and many have been successful in defeating debt . If others can do, you too can be successful and never allow this problem to defeat you. But you must remember that these steps are difficult to take and need will power.

Take stock of the situation by calculating the total amount of credit card debt on all the credit cards you have. Once you arrive at this figure, you will know the real position you are in. When you do this calculation, do not forget to take into account the reward points earned on individual cards.

Stop using your credit cards and get a debit card instead which is tied to your bank account . This way you can not spend more than what you have in your account. This is the most difficult step especially if you are addicted to shopping but is the most important step to your road to success. If you can achieve this you have almost won the battle against credit card debt.

Start paying more than the minimum amount of your credit card bill every month and within a year you will find that your credit card debt has decreased considerably. For instance suppose you have a credit card debt of $1000,you are required to pay the minimum amount of 2% which amounts to $20 dollars per month. If you keep paying this minimum amount of $20, it will take about 13 years for you to pay back $1000 with interest if you do not add to the debt by making use of the card. But if you increase the monthly amount by $10 and make it $30, the debt amount of $1000 can be paid back within 34 months provided you do not increase the principal amount. This shows how increase in monthly bill payments can reduce your debt considerably.

Another important point to remember is that if you pay your credit card bills before the bill closing date or before the start of grace period (which is 20 to 25 days after the bill closing date) you save considerably on the interest charges. Paying just before the due date at the end of the grace period can cost you considerably more in interest charges which may be almost double.

Try to contact your credit card company for reduction of interest rates. Initially you may face hurdles in contacting the right person but do not give up and be persistent. Sooner or later you will be able to meet someone and discuss your problems about your repayment difficulties and ask for reduction in interest rates and seek new manageable payment plans. Most credit card companies will be willing for this arrangement especially if you throw subtle hints at the possibility of you filing for bankruptcy. Credit card companies would prefer you paying back the principal with reduced interest rates rather than allowing you to file bankruptcy which may result in loss for them.

Choose the credit card that has the lowest balance and start clearing it first and once you do this you will have the motivation and the sense of accomplishment to close the second credit card. This way you will be able to close all your cards in due course. This is known as snow ball method.

There is also another method known as snow flake method which involves many small affordable payments such as $5 or $10 as and when you have them. If you keep paying such small amounts which is easy to pay, they add up considerably over a period of time to reduce your debt.

There is also another option of paying all your credit card debts by getting a secured loan tied to an asset. Secured loans have lower interest rates compared to unsecured credit card debt. You may explore this option with a credit counselor. But if you are planning to file bankruptcy at a latter date this choice is not a good one.

If you opt for the services of a credit card debt settlement company you must choose with care. These companies will lure you with catchy slogans making you believe that they will negotiate with the credit card companies to lower your debt amount to more than half. You must realize that there is no guarantee that the credit card companies will agree to this arrangement. Besides these debt settlement companies may charge their own fees which may aggravate your debt situation further. These companies typically ask you not to pay the monthly bills to the credit card companies but pay them instead. These unpaid bills along with the high interest rates charged on them may result in avoidable increase in the total debt amount. The hall mark of fraudulent debt settlement companies are as follows.

1.They will tell you that they can stop law suits and harassment by the debt collectors.

2. They will lure you by guaranteeing to reduce the debt amount by more than half.

3.They will urge you to stop communicating with your credit card companies.

4. They will ask you to pay their advance fees in full within the first few months.

5. They will tell you that they can arrange a new government loan assistance scheme to wipe off your credit card debts.

You also have the option of taking the services of a reputable credit counseling agency that will give you valuable advice on ways to pay off your debts after studying your financial position thoroughly. They will help you devise a customized solution for you. All credit card companies are required to include the toll free telephone numbers of government authorized non profit credit counseling agencies in the monthly statements. Choose the credit counseling agency that is approved by US government by checking the government website www.usdoj.gov/ust for the list of approved agencies.

As the last resort you may choose the bankruptcy option which may only be suitable for a select few. It depends on your particular situation. After a thorough study of your situation the credit counselor may recommend for filing for bankruptcy if it is the only way out. But there are far reaching consequences of this move such as negative credit score which might hinder you in many ways. But the benefit is that you can start life with a clean slate without paying your debts legally but you will have to pay the lawyer fees. Ask your counselor about the implications of bankruptcy before choosing this option.

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