Get Out of Credit Card Debt Now


It all begins so innocently. You whip out your credit card to pay for things like concert tickets, airline and hotels, ballgames, home improvements, etc. The next thing you know, it comes time to pay bills, and you’re paying a lot more than the original asking price of these items. We all do it, and most of us don’t feel good about it later on.

The convenience of paying for things with credit cards has become an American tradition. Worldwide, statistics are becoming overwhelming:

  • Average credit card debt per household (with credit card debt):
  • $16,000

  • Total credit cards in circulation in the U.S:
  • 576.4 million as of year end 2009

  • Average number of credit cards cardholders had:
  • 3.5, as of year end 2008

  • Total U.S. consumer debt:
  • $2.46 trillion, as of January 2010.

Whether we like it or not, statistics don’t lie. So what can we do to get it under control and in some cases even stop it altogether?

Get Your Credit Report

One of the first things to do in stopping credit card debt is to get your credit report. This financial report will illustrate any clerical errors which may have been made and provide you with a complete picture of what is owed.

Examine Your Spending Habits

Take the time to go over your entire financial record and see if you are able to recognize certain unnecessary spending habits which could otherwise be eliminated. Do you notice any irregular purchases from places that you don’t normally go to? If so, these might be events (or certain items) that you could pay for in cash next time. The whole trick here is to record in a ledger the subtle nuances in your spending habits with a credit card. By this we mean getting your spending under control and having a concrete plan in order to begin paying back the debt.

Avoid Hidden Fees / Costs

What about hidden fees, so-called reward plans or interest rates? A lot of credit cards out there come with an annual fee, which could be as high as $500 per year. If you are paying a yearly fee like this, you should seek out and find a better card. Ask family or friends if you need to. Leave no stone unturned in looking for the low interest credit card which best suits your specific needs. Take time to educate yourself about above-average interest rates that you will be paying for in platinum, gold or other high-end credit cards.The reward plans which sound so good at the beginning may not be as fruitful as you thought at first. The majority of credit cards out there typically only pay you back 1 to 2 percent of your expenditures.

Reward Restrictions

Another common mistake made by most individuals is with the frequent flier miles earned with their airline credit cards. Because most of these airline miles are redeemed only by choosing certain airlines, you may be restricted to the only places in which they fly.

Debt Consolidation

Eliminating credit card debt is sometimes a monumental task. If you’re one of the many people out there trying to pay back $5000, $10,000, or even $20,000 plus, then it would really do you well to find a lump-sum of cash or equity to bring your credit cards under control.

Maybe the business that you’re working for has a 401(k) plan that you’ve invested in? If this is the case, you may be able to take a loan against your 401(k) plan without paying early withdrawal penalties. In most cases you’ll need to fully repay the loan within a five-year period. There are many positives in going this route. You don’t need a credit check, the interest rates are low, and the entire interest payment is tax-exempt.

Just consider that the loan will lessen or reduce your retirement funds, affecting your final investment rewards, assuming the account is invested in money-making stocks and mutual funds. And if you lose your job before it’s paid, the money is taxed as income.

Whether taking a 401k loan is the best thing to do varies for each person. A layoff can throw the entire plan off, but those with stable, dependable employment who do not expect to change jobs in the next five years should at least consider it.

If you’re not sure, talk to a professional loan adviser to see what method they can find which will work out best for you. By fully realizing the implications of your spending habits, you can then start to get a positive foothold on where all of your money is going. You’ll start saving money instead of spending.