Credit cards can both be your best friend as well as your worst enemy -- and what they turn out to be, it depends on how you use them. Use them wisely and in emergencies, and they will be your friends for life -- use them recklessly for compulsive shopping and they will turn into blood-sucking monsters.
So, if you are in a situation where you find that accumulated credit card debt is snapping at your financial heels, then it is time for credit card debt elimination. Here are a few practical ways how you can pay off credit card debt:
1. Use your credit card for emergencies only: It is impossible to altogether stop using your credit card. But it is definitely possible to use it strictly only for making emergency payments. So, step one is to stop using your credit card for luxury shopping, traveling, entertainment and eating out, and focusing its use on absolute necessities such as gas, groceries, etc.
2. Pay more than the minimum credit card debt: Credit card companies are tricky guys -- they tell you they are making life easier for you by paying only a small percentage (2 to 3%) of your outstanding, and then they charge you a whopping interest on the unpaid balance. The result is disastrous -- you keep spending more and paying only the minimum due, and your debt keeps accumulating. Therefore, if you want to get rid of credit card debt, you must pay more than the minimum amount due. Gradually, the interest amount will keep coming down and you will be able to repay the outstanding amount in a phased manner.
3. Take a home loan: Sure, the sub-prime market crash may have made taking a home loan an onerous task, but if you have a home and a whole lot of credit card debts, then mortgage your home, take a low-interest loan, and repay off the high-interest credit card debt. Remember, interest paid on home loans is a deductible expense and that is another benefit you derive with these loans. Of course, the primary advantage is that you are using this cash for repaying that monster credit card debt that is hanging around your neck!
4. Borrow from other sources: if you do not have a home to mortgage, then consider borrowing using your life insurance policy or your 401(k) plan. However, remember this: when you are borrowing to repay off expensive credit card debt, then you must not begin splurging once you square it up. Adopt austerity measures and concentrate on paying off the new loan in your life.
5. Shift balances: Analyze your credit cards and you will find that some of them have a lower rate of interest. If you do have such low interest cards, then shift the outstanding balances from your high-interest cards to these.
6. Negotiate with the credit card companies: If nothing else seems to be working, then it's time to have a sit-down with your credit card company and place the cards on the table. Tell them that you are unable to pay the outstanding balances, and if they want their money back they will have to restructure the credit card debt. Every credit card company will sacrifice something to get their outstanding back, and nine times out of ten they will plan a good repayment deal for you.
That was how to pay off credit card debt faster. We hope the information was useful. And, good luck to you on finishing off your unwanted credit card debt.