How to get out of credit card debt

The essential first step you must take to get out of credit card debt, is to stop using your credit card or cards. Every time you use your card without having the ability to repay that expenditure in full when your monthly statement arrives, means that you are increasing your total debt amount, and making your debt problem worse.

Store cards are probably the worse cards to have. They have traditionally charged the highest interest rates, and, because they are usually restricted to one particular brand of store, they encourage you to buy more than you need at any one time.

So, stop using all your store and credit cards, except for one credit card that you can use anywhere, and use this just to help you when you need to scrape through a month.

Transfer your balances to another card offering a lower interest rate for purchases - you won't be making many purchases on the new card but at least the interest rate will be less than the old cards. Most credit cards offering a 0% balance transfer rate these days have a balance transfer fee of about 2% which will be added to the actual balance transferred to the new account. When you have transferred your balances, and if you haven't already done so, CUT UP THE OLD CARDS and close the accounts. You still have one of the old cards for emergencies, plus the new card with all your balances rolled into one. You can find out about the best credit card deals being offered by searching online.

One of your own card providers may be able to offer you a good balance transfer deal. It is worth a telephone call to establish what they could do for you.

If transferring balances to a cheaper card is not an option, then you must prioritise all your cards and aim to pay off the most expensive first. That is to say, first pay off the one with the highest apr %. Then move to the next highest interest rate and so on.

• Ensure that you make arrangements with each credit card company to pay the minimum monthly payment by direct debit. This will create a disciplined payment each month preventing a missed or late payment that will only aggravate the card issuing company.
  
  
• Reduce your spending each month so that you can make an additional payment (over and above the minimum amount paid by direct debit) using the payment slip on your monthly statement. If you use an online credit card account, make a telephone payment using your bank debit card.
  
  
• If you have cash savings bear in mind that the rate of interest paid on them is a lot less than the interest you are charged for your borrowing, so I reckon it is better to consider using savings to reduce debt.
  
  
• Go through your monthly budget to see whether you can make savings to enable more credit card repayments. If you have not already looked at the sections on creating a budget, do so now.
  
  

A footnote. I advocate cutting up most of your cards as opposed to storing them somewhere safe and not using them. The reason being that, human nature being.... well, human nature, unless you are able to exert strong discipline over your spending, at least until your debt problems are sorted, there will always be the temptation to start using the cards again, which will undo any progress you have made and make your debt problems worse. A spending spree might make you feel good for a short while, but when reality kicks in again, you''ll be much worse off.