In these tough economic times, many consumers have found credit card debt catching up with them despite their best efforts to pay down their debts. For some people it’s hard to pay more than the minimum each month, or to make payments on time. In these cases, the accumulating interest, late fees, and possibly even over-the-limit fees all add up on top of the principle balance, causing them to sink further into debt. Even those who previously kept their card balances low may have found it necessary to rely on their credit cards to pay for groceries, utilities, gas, and other basic living expenses. As credit card balances swell, so does the stress. Some even struggle to keep up with their minimum monthly payments, especially if trying to pay several different cards.

Step 1: First Call Your Creditors to Negotiate Lower Interest Rates

This is the all-important first step that most people skip. People often never call their creditors to even ask for lower rates. As a result, it makes it harder to eliminate the debt and leads to higher costs.

Always keep in mind that lower interest rates make it easier to pay off debt. A lower rate means less of each monthly payment you make gets eaten up by accrued interest charges. Thus, you can pay off the principal (original debt owed) much faster.

Step 2: Streamline Your Budget to Maximize Cash Flow

Next you need to increase your cash flow as much as possible for your debt reduction plan. See how much free cash flow you have in your budget – that’s all the cash you have left after you pay bills and necessary expenses. Then see if you have any unnecessary expenses you can cut temporarily while you reduce your debt. Remember, you can make these expenses again once you’re done eliminating debt. Think of it like a diet you stick to while you lose all that extra financial weight.

The more cash flow you have available to reduce debt, the faster you’ll clear it – faster also means fewer interest charges applied to your debt, so it saves you money, too. It’s worth losing a few discretionary expenses for a short time to make sure these high interest rate debts are paid off fast. A great way to track which monthly expenses you could reduce is by finding a credit card that comes with a banking app; some banking apps will automatically save a certain amount monthly for you, track where exactly your money is going and even make projections for your finances based on your current spending habits.

The more cash flow you have available to reduce debt, the faster you’ll clear it – faster also means fewer interest charges applied to your debt, so it saves you money, too.

If the credit card debt solutions in Step One and Step Two aren’t enough to handle your debt, you can try this:

Step 3: Balance Transfers

Find a lower interest rate credit card and transfer your balances from other cards. This type of do-it-yourself consolidation can be helpful for some people looking for a credit card debt solution, but it’s important to check offer terms to ensure the fee paid for the transfer doesn’t outweigh the savings on interest. Also, bear in mind that the any low introductory interest rate will increase after a certain period.
Conclusion

Whatever credit card debt solution you choose, it’s vital to check the credentials of any debt relief company you work with, so as not to make a bad situation worse. If you’re considering a Debt Management Plan or Debt Settlement Plan, consult a reputable provider who offers multiple credit card debt solutions, not just one type of plan. That way they can assess your situation and help you choose which option is best for your situation