A credit card can be a useful tool, but too often balances pile up and interest rates ratchet higher than you bargained for. Credit card debt management is not rocket science: It's a simple plan to eliminate credit card debt without having to declare bankruptcy in the process.
Credit counseling can be part of the solution, and in some instances, paying for a debt management plan can make sense. Unfortunately, desperation is a pretty lucrative business. If your bills are getting out of hand, you could be an easy target for a credit card debt management scamster.
In this guide to credit card debt management, you'll learn:
1. How to do it yourself using online credit card debt management tools.
2. The difference between credit counseling and debt management plans.
3. Legitimate avenues to debt consolidation to eliminate credit card debt.
4. Avoiding credit card debt management scams.
Do it yourself credit card debt management
Impossible, you say? Not so. The first step is to admit you have problem and act: Cut up your credit cards, shred them and decouple the account numbers from any automated online buying sites, like Amazon.com. Then sit down, create a budget, and figure out where the payoff money is coming from to eliminate credit card debt.
- Debt management starts with spending management tools that allow you to compare your spending against national averages, adjusted for income. Also consider budget planning software and services.
No discipline? Get credit counseling
Part of the reason people get into financial trouble is because they don't have the power over their own purse in the first place. Credit counseling can help, and there are plenty of financial planners and non-profit credit counseling experts who make it their business to teach financial basics like credit card debt management. Debt management plans, which require regular payments and are not free, should be considered as a last resort.
- Find a certified financial planner or credit counsleor who can get you started with a debt management checklist.
Good credit means debt consolidation could be the way
There is no reason to pay a credit counseling service to help you secure a debt consolidation loan to eliminate credit card debt. If you have a good credit record and especially if you own your home, a debt consolidation loan from your own bank is no harder than borrowing for a new car or vacation.
- A debt pay-down advisor can help you decide whether a loan or just paying more each month makes the most sense.
Watch out for credit card debt management scams
One of the toughest situations for people who have issues with credit card debt management is making the right choices. This can be harder still when there are so many websites promising debt management but with tons of fine print and fees. Learn to be a better consumer: Any crazy offer to cut or reduce your debt without pain is highly unlikely to be true.
- Take any specific numbers on a website (slash your debt 80%!!) with a huge grain of salt. Debt management is not miracle working.
- If you decide to eliminate credit card debt with a new, lower-interest loan, cut up those credit cards quick or you'll end up worse off in short order.
- When credit card debt management requires you to limit your spending, it can become frustrating. Keep yourself motivated by including a few small rewards in your budget for hitting specific debt reduction goals.