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Research: How To Manage Credit Card Debt -

If you are one of the many Americans who find themselves drowning in credit card debt these days, the following are a few suggestions of the best approaches to take while paying it down.

Meeting the Minimum is Not Enough

Bad habits are hard to break, and cultivating the habit of just making the minimum payment on your outstanding credit card balance each month is one of the worst financial moves you can make. Minimum payments usually amount to a meager 2 to 3% of the entire outstanding balance so paying that amount only will result you in paying for a longer period of time and shelling out more money overall as interest accrues.


One very effective way of paying down credit cards debt that spans multiple cards is by employing a tactic known as “avalanching.” This is how it works – organize your cards from the one with the highest APR to the one with the lowest APR. Don’t get caught up worrying about the balance on each, just focus on their interest rates. Make the monthly minimum payments (on time!) to all of them except for the one with the highest APR, for that card make the minimum monthly payment plus whatever else you can possibly manage to tack on until that card in completely paid off. Then move on to aggressively paying down whichever card has the next-highest  APR while maintaining minimum monthly payments on the others until you have paid down all of your outstanding credit card debt.

Talk Terms With Your Creditors

If you are seriously financially strapped and can’t handle making even minimum monthly payments at the moment, call your creditors ASAP and let them know your situation. Call them before you simply stop paying, they will be a lot more likely to be willing to negotiate different payment terms if you have not yet defaulted on your loans. Request a new and lower repayment schedule, ask them to reduce your interest rate and, if need be, appeal to their desire to be repaid.

Drop the “bankruptcy” bomb if you think it will make a difference, as in hinting that you may find yourself with no choice but to declare it unless you rearrange your financial house a little. In almost all cases creditors will do whatever they can to protect themselves from having to take a total loss.