by Kris Olds

Created on: May 18, 2007   Last Updated: February 11, 2009

Eliminating credit card debt is at the top of the financial to-do list for most Americans. But if it were as easy as just paying it off, there wouldn't be an entire industry established to help consumers with their debt. Here are a couple of suggestions to get a hold of your credit card debt and pay it off.

STEP ONE: ASSESS THE DAMAGE

Before you can eliminate your credit card debt, you have to know how much you owe. This may mean thoroughly reading every piece of mail that comes through your mailbox. It's not enough to just look at the minimum payment and slap a check into the envelope. Gather all your statements and your credit cards and then sit down with a blank piece of paper. Open up your wallet and write down the name of each card and the last four digits of the account. Find the statement that is associated with that card and write out the total balance, the interest rate that you're paying and the minimum payment. Also make note of the due date for the bill. Are you missing statements? Call the company and ask for a statement to be mailed. Or go on-line if that's an option provided by the credit card lender. Once you have determined that you have written out all of your credit card debt, even the cards that you have hidden away in your sock drawer "for a rainy day", add up the total. This number may seem overwhelming. Do not panic. You didn't accrue the debt in one day, you're not going to have to pay it off in one day. Get comfortable with the number.

STEP TWO: FORMULATE A PLAN

Take another blank sheet of paper and on one side, order the accounts by their balance, lowest to highest. Flip the sheet over, or get another sheet if you have more accounts than can fit on one page, and order the accounts again by their interest rate, this time highest to lowest.

There are two different philosophies when it comes to eliminating credit card debt. One philosophy says to pay off your card with the highest interest rate first while continuing to make monthly minimum payments on the others. This will save you money in the long run as you will be paying less money in interest to the credit card company. The second philosophy is to establish the monthly minimum payments for all your accounts and then use any remaining money to pay the card off with the lowest balance. Once that card is paid off, you then take that payment amount and add it to the minimum balance of the next card with the lowest balance. This is called the Snowball Method. One of the benefits to this approach is that you will more quickly see the results of your efforts when you have cards with no balances.

STEP THREE: STAY DISCIPLINED

DO NOT use your credit cards, other than in emergency situations. A nice dinner out with friends DOES NOT constitute an emergency. If you continue to add to your debts, you will find yourself in an impossible circle that will never lead to the elimination of your credit card debt. Consider closing some of your accounts if you don't think you're able to handle the temptation of having them open. You can't spend what you don't have access to.

The secret to eliminating credit card debt is to be knowledgeable, steady and consistent. You have the tools within your grasp to get out of debt. It is simply a matter of applying what you already know needs to be done.

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