Credit cards are an excellent tool for handling your money when used in the right way but when you don't see any money leaving your account and with minimum payments so low it is all to easy for debts to spiral up and up to a point that is stressful to manage.
But the options seem limited; you probably think that it's almost impossible to make your paycheck stretch enough to get a handle on all of your debt. It can be easy to let credit card debt take over your life - don't let it! Whether you had an accident and had to live off of your credit cards for a few months, or just weren't smart with your debt, there are ways that you can control your debt and pay it down - without asking your boss for a 50% pay raise! Here are the best tips for credit card debt consolidation:
* Put down the credit card: It may seem like common sense, but if you're still charging purchases, you will never escape your credit card debt. Hide your credit cards and use your debit card to make your everyday purchases - you'll soon spend well within your budget!
* Cut down on luxuries: Do you eat out for lunch everyday? Do you absolutely have to have that four dollar latte every morning? Luxuries like these are exactly that - luxuries. When you're trying to get rid of credit card debt, you have to give up a few unnecessary luxuries. Try bringing your own coffee to work, or make lunch at home. The peace of mind you'll have once your debt is gone will definitely be worth it.
* Look into a balance transfer: If you've been carrying a hefty balance on your credit cards, you may as well be flushing fistfuls of cash down the toilet. When you carry over a balance on your card month after month, your interest rate skyrockets, which puts even more pressure on your wallet. Consider a balance transfer to a low interest rate credit card, which will help save you hundreds of dollars in interest; not to mention make it much easier to pay down your credit card debt.
Balance transfers are a god option for many people, but a word of warning on balance transfer offers: make sure that you're not buying into an introductory offer. It can be a real kick when your down if you see your credit card balance shoot up once the balance transfer offer period ends!
* Try consolidation loans: Many banks will offer you private debt consolidation loans to help you pay off that credit card debt. But make sure you're not charging anything to your cards while paying off the consolidation loans, as you'll just be digging a deeper financial hole.
* Make extra payments: Many people pay only the minimum payments on their credit cards, but this prolongs the life of your debt - not to mention the hundreds of dollars that you're throwing away on interest alone. Make sure you pay above the minimum repayment and if possible make small extra repayments during the month when you can afford it. You'll see your debt shrink in no time.
Here's another tip for making extra payments: use the money you previously spent on unnecessary luxuries towards your credit card debt. For example, if you spent four dollars a day on your large coffee for a month, that's 0...for some people, that's like another credit card payment! If you budget your monthly expenses based on what you need - not what you want - you'll find the money to make those extra payments.
* Dip into your savings account: This suggestion may seem a little shocking, but if you're drowning in credit card debt, it's worth dipping into your savings to alleviate the debt. However, if you can, try to avoid cashing out your 401(k) or any other retirement savings you may have.
* Borrow funds against the value of your life insurance: If your life insurance has cash value, borrow against the policy. Again, this suggestion may seem a bit shocking, but you need to get rid of that credit card debt! However, make sure you pay back the loan, as any leftover debt will paid off by using part of your policy. This may seem insignificant now, but your grieving family will thank you for it.
* Get a home equity loan: If you're a homeowner, and have accumulated equity over the years, consider a home equity loan (HEL) in the amount needed to pay off your credit card debt. Home equity loans often have lower interest rates than those of credit cards, so you'll be trading off your debt at 18% interest rate for one at 6%. This method alone will help you find some extra cash to pay off debt.
But before you take out a home equity loan, make sure you've learned your lesson regarding credit card debt. Don't take out a loan, and then continue to use your credit card to make purchases - you'll only further bury yourself with debt.
* Talk to the credit card companies: After all, they're human too! If it seems like you've tried everything to get your debt under control, with no success, try taking your case to the credit card companies. Let your creditors know your situation. Maybe you still haven't recovered from that accident, or you had a huge unexpected purchase to make; regardless, ensure you mention the word bankruptcy in the conversation. The last thing credit card companies want to lose is their money, so they'll often renegotiate your interest rates and debt balance in order to protect their assets.
* Go to credit counseling: Credit counselors can be an invaluable help if you have major credit card debt, they can often help cut your debt balance in half. This is often the last step taken by individuals before declaring bankruptcy, and one of the most successful.
Although you may feel like you're drowning in debt, don't worry - there are ways out that don't involve getting a better-paying job or declaring bankruptcy. Just follow these tips, and you'll be debt-free in no time; but beware! Make sure you've learned your lesson, or else you'll repeat the debt cycle again and again.