Get out of debt before taking on new credit card deals

May 17, 2007

Everyone loves the paying power of plastic. Don’t have a card for our store? Sign up today and get 10 percent off your purchase. Save more! Spend less! That is what everyone wants you to think. At least, most retailers. The thing is, when you have one of their cards, it makes you want to shop there more. Why? To save. But even when you are “saving” you are still spending.

The average debt for the American family is around $8,000. Some people are below; others may find themselves far, far beyond this number. When you take a look at how much debt you have in relation to this number, it can really put things into perspective. Where do you fall concerning the average? Are you much higher? If you are, then you should start taking some steps toward eliminating your debt.

Getting into credit card debt takes time and money. Getting out of credit card debt will take time and money. In the first place, you spent and spent over time (and for some, it only takes a few short months because their spending is so uncontrolled) and the debt has slowly accumulated, getting interest added to it as the balance on the card remained there.

Getting out will mean you must ease up on spending a great deal and begin paying off your balances. It will take time and patience, but what would you rather do? Take a few years to get your debt under control or continue down this path until you find yourself approaching bankruptcy?

You must realize that your spending is what got you into this position in the first place. Being unable to admit that you and you alone are the reason you owe so much will not allow you to effectively make any changes. Are you making somewhat useful purchases with your credit card such as gasoline for your car and the occasional dentist visit? Or are you simply moseying over to the nearest convenience store and stocking up on candy bars and magazines?

If you use your card too much for a great deal of smaller things, the amount can quickly add up as you probably do not keep close track of what you are spending your money on. A few purchases each week of every month can pile up to a surprising amount without your ever knowing it. Make sure to use your credit card only for necessary items or events in order to keep expenses down.

Open your wallet and look at how many cards you have. If you have more than 3 cards, chances are that is too many for you. If you have a credit card for every retail store you go to plus a few different credit cards from different vendors, you can easily compile a hefty amount of debt through having so many. Stop using cards you do not need or that have been maxed out. Get out a trusty pair of scissors and cut them into little pieces to free yourself from the temptation of using them again.

If you are only paying the minimum amount on your credit cards, do what you can to start paying more. Only paying the minimum amount means you will have a much harder time fully paying off your balances as much of that payment will be going toward the interest your balance is earning. You might be surprised at what a few extra dollars can do in lowering your balance if you pay more than just the minimum.

A great way to help get your balances back to zero are to transfer them over to a credit card deal that offers 0% or another credit card that has a low APR or even a low interest rate loan, such as a home equity loan.

For 0% balance transfer credit card deals, be sure to find out the period of time for the 0% to last so you do not get stuck with an even higher amount when the introductory period is over. If you really need help, you can go to a credit-counseling agency, and they can work with your creditors to lower your monthly payments and get you a low interest rate.

If you have been left with no other options and have done all you can, then filing for bankruptcy is your final measure to take. Bankruptcy is not an easy way out like some might believe. Even if you are allowed for some of your credit debt to be erased totally, many decisions may be made that only some of your credit debt be erased, leaving you with repayment plans to aid you in paying what is left.

The other problem with bankruptcy is that is will appear on your credit report and give it an air of bad credit, as it will show other creditors that you are irresponsible when it comes to handling credit, and it may lead to the denial of new credit card deals. Bankruptcy will remain on your report for a long time, so only file if you have absolutely no other choice.