Credit Card Debt

Tips on managing it

Promptness Pays

By the old "a penny saved" adage, promptness certainly does translate to earnings. One would think that whopping late fees would be their own deterrent, but procrastination and forgetfulness are powerful forces that often yield financial castigations. Take measures to insure you remember, because late charges compound credit card debt and compromise your credit score:

Set reminders in your cell phone

Mark the calendar on your PC

Arrange automatic credit card payments through your bank

Mini minimums

Making the minimum payment each month simply won't cut it. Your credit card company will love you for it, but you'll be kicking yourself in the long run. Paying only the 2% minimum payment on a $1,000 credit card debt every month will take over 21 years to repay at the average APR of 18.9%. The accrued interest over that period: over $4,000. Talk about running to stand still.

The solution is simple: dig deep and pay more. If the minimum is all you can afford, keep reading. You'll find tips that might buy you some time.

Be the annoying customer

You've got leverage with credit card companies. Use it. Make your credit card debt work for you for a change. Without that debt, your credit card company has nothing. This is one case where navigating the gauntlet of automated customer service pays dividends. When you finally have a representative on the line, discuss lowering your APR. Ask about promotional credit rates. Even if they reduce your APR for only a short period, that's less debt that accrues. When that promotional rate expires, call and request another. Your credit card debt is their livelihood. They'll bend in order to keep it.

Rethink loyalty

Ask yourself why you're with your current credit card company. Is it the first credit card you've ever had? Did they have an irresistible promotion? With so many credit card companies vying for your business, chances are there's a better offer out there. With a little research, you're likely to find no-fee balance transfers and low introductory rates. If you can't negotiate a lower rate with your current credit card company, transfer your balance to one that will oblige. After all, it's your credit card debt; do with it what you will.

The budget balancing act

Creating a budget takes time and strategic planning, and may even require a few revisions over the first month or two. But no battle is won without a plan. Like General George Patton famously said, "A good plan today is better than the perfect plan tomorrow."

With a budget and a little discipline you'll know exactly how much you can spend on groceries, entertainment, gas, etc. And you'll know how much is earmarked for payment toward your credit card debt. Adhering to the rules is the hard part. The benefit is this: you'll be able to calculate precisely when you'll be free from credit card debt. Now that's something you can look forward to.

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