Running into credit card debts is not an uncommon occurrence. But, at times, the credit card debts run out of control and require thoroughly measured out steps to be taken. So, what does it take to eliminate credit card debts?
A well-planned and executed strategy is required to phase out credit card debts. It may mean cutting down on certain expenses/luxuries, but it’s a small price to pay for living a debt-free life. So, here is how to go about credit card debt elimination.
1. Analyze your credit card debts and financial condition: Credit card debt elimination essentially takes up one of the following forms: self-help credit card debt elimination, credit card debt counseling and settlement, and as a last resort, bankruptcy. The first step is to analyze the nature and amount of credit card debts, your liabilities and expenditures, gross monthly income from all possible sources and then zero-in on the option that suits you best.
2. Get your act together: Create a reliable budget for yourself. Stretch your budget to minimize unnecessary expenditures and maximum payments towards your credit card debts. You might consider paying off credit card debts in such a chronicle that debts that attract highest interest rates are catered prior to other debts. Try making at least minimum required payments towards other debts. Another idea is to wrap up the smaller debts first.
3. Shift your credit card debts on to a single low-rate credit card: It makes much sense to organize your credit card debts under a single credit card. Do your research on a compatible offer by a credit card company and transfer outstanding debts on to a single credit card. Steer away from paying out interest on multiple credit cards and breathe easy to find all your debts accumulated under a single credit card. No hassles of paying for each credit card, as a single payment is all that is required.
4. Stick to a payment schedule: There is no point shifting credit card debts on to any single credit card if you default with your payments. On the contrary, make efforts to pay more than the minimum required on your monthly balance. The more you pay, the lesser the amount on which interest is charged. So, pay the maximum you can and get out off credit card debts quickly without paying huge on interests.
5. Be street-smart, monitor your credit card usage: Although it’s best to do away with your credit card for a while, at times it is handy to have one credit card (especially for emergency situations). You can lower the credit limit on your card and use it very selectively. Preventing credit card debts from piling up is a pre-requisite to eliminating credit card debts.
6. Credit counseling: In case you find it difficult to solve your credit card debt problems, make use of credit counseling services. There are a number of non-profit credit counseling agencies that offer professional counseling and advice to people who are deep into debts. These agencies help you chalk out sustainable repayment plans for thinning down your credit card debts. Run an in-depth check into the agency’s terms and conditions before signing up with them.
7. Credit card debt settlement and elimination: It involves talking terms with creditors and settling down on a mutually agreed contract. You may do the negotiations yourself or make use of professional advice by hiring a debt settlement company. These companies do an in-depth study of your financial conditions and sketch out negotiation plans with the creditors on your behalf.
Once the negotiations settle down to the satisfaction of the creditors, you start paying a fixed amount to the debt settlement company. Your payments are furthered to the creditors in agreed upon ratios by the settlement agency. So, you have to direct just one consolidated payment to the settlement agency, which in turn route the payment appropriately. The flip side to such a settlement is that it is liable to hurt your credit scores. You will also have to do a stringent background check on the company to keep counterfeits at bay.
8. Bankruptcy: This is the last resort to eliminate credit card debts. Pursue bankruptcy only when you have exhausted all your resources and chances to eliminate credit card debts. Bankruptcy causes long lasting and severe damage to your credit history. Opting for bankruptcy will make getting loans, credits, and even credit cards just next to impossible. Bankruptcy signifies your financial breakdown and repercussions are experienced for a long time.
Eliminating credit card debts isn’t as tough as it sounds. Just get your basics right and stay put. It may be time-consuming but surely there is a way out.