by Kevin Bradley

Created on: January 27, 2009

Credit card debt is very easy to accumulate but hard to eliminate without some plan of action in place. Most people will continue to struggle each month and only pay off the minimum payment requirement rather than set out a plan of action to eliminate their debt.

The plan below outlines a step by step process to eliminating credit card debt and should be implemented before debt accumulates to a level where the service of a debt management professional is required.

Step 1: Stop accumulating more debt

It may sound too obvious, but the first step to eliminating debt is simply to stop accumulating more debt. If a person continues to accumulate debt needlessly each month it is much more difficult to get out of the perpetual debt trap. By cutting out needless debt expenditure it automatically improves the chances of reducing debt quickly and eventually eliminating debt completely.

Step 2: List all credit cards including those without balances

List every credit card including the current balance, the minimum payment requirement, interest rate and whether there had been any cash advances taken out. The list should be sorted with the highest interest rate first and the lowest rate last.

Step 3: Phone each credit card company

Many people accept the interest rate charged by their credit card company without hesitation. However, a simple phone call to each credit card company and a request to lower the rate of interest charged may bring some rewards. Without asking for a lower interest rate it is safe to assume the credit card company is unlikely to lower the rate on their own accord. If successfully lowering the rate then simply change the order of cards listed so the highest rate card is first and the lowest rate card is last in your list. If unsuccessful in lowering the interest rate then any credit card with a zero balance could be used to transfer money from the highest interest rate card.

Step 4: Calculate the minimum repayment for all cards

When all cards are listed with their minimum repayment amounts it will be simple to total up the minimum repayment needed each month. It is important to ensure each card receives the minimum payment to avoid any additional finance charges. A direct payment should be set up to make sure each card receives the minimum payment in time.

Step 5: Set up a budget

After carefully figuring out the minimum repayment for all cards it is time to set up a budget to find out where any extra money can be found to put towards eliminating credit card debt.

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