Is your credit card debt spiraling out of control? Practical

Is your credit card debt spiraling out of control? Practical pointers on taming the beast

The average credit card debt carried by every consumer is about $9200. However, many of us have far more than that figure, as this is only the average. Young people who may qualify for just one credit card with a limited line of credit are averaged in with established credit card holders with many credit cards. So long as you make your monthly payments, credit card companies are more than willing to saddle you with another one or at least they were, until the 'credit crunch' emerged, banks claiming 'toxic assets', eventually resulting in the recent bank bailout in order to 'save' these corporate institutions.

The banks were saved, but consumers were still facing the enormous debt, often compounded by late fees, increased credit card APRs and a consequently poor credit rating. So, people sometimes think their only alternative is to resort to taking a cash advance on one card in order to meet the minimum monthly payments on others. This is not the answer. In the end, you're only piling on more interest debt. The eventual outcome of this type of strategy is that you find yourself back at square one, with no cash advances left. Here we offer some pointers on tackling credit card debt in ways that actually reduce your debt.

1.Begin by going over your budget. You'll need to be ruthless in eliminating unnecessary expense, in order to improve your cash flow, thus having more disposable cash to reduce your credit card debt, month by month and card by card.

2.Calculate the minimum payments on every credit card you hold. Check the APRs on each. Make your highest APR credit card your first target. Let's say you've managed to eliminate $100 a month of unnecessary expense from your budget. While making the minimum payments on the other cards, use that $100 to add to the minimum payment on that highest APR card. If the current balance on that card is $3000, in one year you'll have reduced it by $1200, plus whatever the minimum payment is. This strategy results in a significantly reduced balance, as well as less accumulated interest.

3.Tackle the next highest APR credit card in your wallet. Continue by now making just the minimum payment on card #1 and divert that same $100 to the next card until it's reduced substantially. Remember that it's the accumulated interest that really piles on to your total credit card debt. Proceed in this manner until all of your monthly credit card minimum payments are reduced.

4.As each credit card is paid down, calculate the difference in total monthly outlay, were you to have only made the minimum payment. Add these amounts to your initial additional $100 per month excess payment. For example, if your original minimum payment on card #1 was $200.00 and is now $100, take that additional $100 and now apply $200 above the minimum payment to card #2. The result is a quicker reduction of your total credit card debt, with declining accumulated interest and an improved credit rating.

5.Alternatively, you might use the $100 gained by paying down a high APR credit card to wipe out some cards with smaller balances. For example if you've got a department store credit with a $300 balance, apply the $100 gained to that department store credit card for three months. One less monthly payment. Do the math to see which method is most advantageous to your situation.

6.Credit consolidation may be your best move. Contact a credit counseling organization for advice on the best strategy that is the one which reduces your overall credit card debt in the shortest amount of time. If you've got several cards with a high APR, credit counselors may be able to negotiate a lower interest rate with the credit card company.

In any case, be sure you can make at least the minimum monthly payment on time, every month. It's best for your ultimate financial situation to not incur any new debt during this process. Emergencies can arise, but if you have any other way of meeting the expense, including using savings account funds, that's a better choice than loading up a credit card again.

While it sounds cynical, credit card companies want you to be in debt for as long as possible. Interest and late fees are their profit. No matter how desperate the situation may seem, do not go for the so-called credit card offer for bad credit. All this will do is mire you down in even more credit card debt, which will be even more difficult to pay off.

Just as the minimum payment method has a snowball effect, so do the strategies outlined above in the opposite direction and in your favor! Getting rid of credit card debt does take time, discipline and patience. Just stick to your program and you will, eventually, be free of credit card debt. Every little bit counts.

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