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It may seem somewhat obvious to say but when considering how to eliminate credit card debt, the first step we have to take is to stop using our credit cards. We may wish to stop short of actually cutting them up to remove any form of temptation altogether, with a view to beginning using them again in a more sensible fashion when we have successfully eliminated our outstanding debt - this is a matter of personal choice which we each have to determine of our own accord.

When we have taken this first step and are getting serious about eliminating our credit card debt, there are two general ways in which we can proceed. We may wish to consider eliminating the credit card debt in one foul swoop by taking out a consolidation loan. This is a loan which is likely to be at a significantly lower rate of interest than we are paying on our credit cards(s) and the proceeds from which will clear the outstanding balance on our cards. As we will be paying what may well be substantially lower levels of interest on this loan, we will in effect be paying back more of the outstanding debt each month and will therefore be able to eliminate same altogether in a more timely fashion.

If we decide for whatever reason, however, to simply eliminate our credit card debt by paying more to the cards each month, the first step we have to take is to look at in which other areas of our finances we can reduce costs. This has to be a ruthless exerise, involving considering everything from our grocery bills, to how much we spend on entertainment and social events, to perhaps how much we are contributing to savings plans in the short term. Anywhere and everywhere we can make cost reductions in order to channel more funds towards eliminating the debt on our credit cards will be beneficial.

If we have a number of credit cards, it makes sense to try to eliminate the debt on them one at a time. We should look at the one which is charging us the highest rate of interest and target all our extra funds towards eliminating the debt on this card, while of course continuing to make the minimum monthly payments to our other credit cards. We then proceed to target the card which is charging us the next highest rate of interest and so on until the procedure is complete.

It is vital of course that when we eliminate our credit card debt, we ensure that we do not simply proceed to build it up again. This means that we should sit down and produce a sensible monthly budget, one which may involve us using our credit cards but ensuring that we clear same at the end of each month. Only in this way can we stop the credit card debt which we have struggled to eliminate from building up again in similar fashion.

Learn more about this author, Gordon Hamilton.
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