The economic tumult of the past year left consumers in this country spinning. Many were at a loss for what to make of their economic futures. With 2009 upon them, consumers are looking ahead and trying to chart a course for their financial security. Some are shaken, but will weather the economic storm okay. Others have racked up debt on their credit cards and are seeking ways to reduce or erase that debt. It is estimated that the average number of credit cards per consumer in this country is four. Credit cards are a common way of making purchases. They are a convenient and useful tool, if used responsibly. But credit cards can also offer an opportunity to overspend. It takes commitment to pay debt off, once it is accrued.

The first step to reducing and eliminating debt on your credit cards is to stop making purchases on the cards. It may be common sense, but erasing debt while you are accruing more is not easy. Also, resist the urge to apply for new credit cards. Alter your spending behavior. Write checks, use cash or a bank card that automatically takes the amount from your account. Next, examine your budget to determine where you might be able to cut expenses. The most logical area of your budget in which to do this is discretionary items. Start taking your lunch to work, making your own coffee and get rid of unnecessary entertainment expenses. Take the money you save on those discretionary items and put it toward the balances on your credit cards. If you cannot cut your budget any more, you may look into picking up additional work or selling unnecessary big ticket items (like downgrading to a less expensive car).

Once you clearly understand your finances, make reducing the debt on your credit cards your priority. Make more than the minimum payments on the monthly statements. Continually paying only the minimum payments means that most of what you pay is going toward interest paid to the bank. If you pay more than the minimum, you will pay down more of the balance. Work on the card with the least amount of debt first, if you have debt on several credit cards. It is much easier to focus on one card at a time, and you will be encouraged to move onto another card once you pay one off. Whenever you have extra money, make an extra payment on your credit cards. Once you start paying off your credit cards, close the newest ones and keep the oldest. Having long established credit card accounts that are in good standing reflects positively on your credit score and credit report. Maintain your commitment to paying off your debt until the balances on all your credit cards have been paid. If you start using your cards again, remember how hard it was to pay off debt. Pay off your balances in full and view your card like you would a check or cash. You are responsible for every purchase you make on your credit cards.

This entry was posted on Saturday, April 11th, 2009 at 9:04 am and is filed under Student credit cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.