Credit Card Debt Sucks

When you applied for your very first credit card you  told yourself it was an important step in your financial future. After all, having a credit card is an essential part of building credit, right? And credit cards come in handy in the case of an emergency too.

But after a few weeks-or even days-you found yourself charging your lunch and late-night pizzas on your card. Suddenly "emergencies" consisted of clothes, dvd's and other things you just couldn't live without. Before you knew it, these charges that seemed so small at the time, had quickly added up to a sum that was too large to pay off all at once. You were left wondering, with all your good financial intentions, how did you get into credit card debt so quickly?

The good news, if there is any, is that you aren't alone. Many recent news reports have covered the issue of student credit card debt. According to a recent study published by Nellie Mae, a leading provider of higher education loans, 83% of college students nationwide have at least one credit card and 21% carry cards with hefty balance levels between £2,000 and £5,000.

Credit card debt can sneak up on anyone quickly, but if you don't get it under control quickly, it can be quite detrimental to your financial future. So how do you begin to manage your credit card debt effectively and start reducing your outstanding credit card debt ? It really isn't as hard as you  think; it just takes persistence and dedication. Here are some tips to get you on your way to being credit card debt free.

Credit Card Debt UK Where to Begin
Most people have heard the rule that you should always put at least 10% of every paycheck into savings. Instead of building up a savings account, however, those with debt should put all their extra money towards credit card debt payments. Gerry Detweiler, author of The Ultimate Credit Handbook, agrees. She says that if you're truly serious about getting out of credit card debt, putting every penny toward your bills makes better financial sense than setting aside money in a low interest rate savings account.

Another important thing to remember is that you should always pay off your higher interest rate credit cards first. On the highest interest rate debt, always pay as much as you can possibly afford. At the very least, you should always pay the minimum but put any additional money into paying this credit card debt off first. On the lower interest rate debt, continue to make timely minimum payments. Once you have paid off your higher interest rate debt, begin to apply that money to pay off your second credit card  debt. Continue to make minimum payments on any other cards as well-always allocating the most money to your highest interest rate debt. Doing this will have a snowball effect; eventually, you will see your debt get smaller and smaller.

If you are able, it is helpful to pay more than the minimum payment each month. The minimum payment is usually two to three percent of your balance and is made up of 90% interest, with only 10% going towards reducing the principal. For example, on a £3,000 balance with a two percent minimum payment, your payment would be £60 with only six pounds of that payment going towards shrinking the actual debt. Pay a little more than the minimum and you will be surprised at how quickly the balance decreases.

Other Options
You can also switch your balances over to a lower-rate card.   Usually, these lower rates are promotional rates that range anywhere from three to 15 months, so be sure to read the fine print of the offer before you sign on the dotted line.

Also, do not be afraid to ask your credit card company for a better deal. Lenders are very competitive these days, so it cannot hurt to call and negotiate a lower rate or ask them to cut the annual fees. When you speak to the customer service representative, tell them that you are going to close your account if your request is not met. Remind them that other cards are offering you lower rates and no fees. Be prepared to name names because the phone representative will usually ask what credit card company. Stand your ground and you will more than likely be able to negotiate a one to five percentage point decrease. Reducing your interest rate will make it easier to pay the debt off more quickly.

What About Student Loans?
If you have credit card debt and outstanding student loans, this is not the time to stress about the loans. Start whittling away at your credit card debt first. In today's economy, student loan interest rates are much lower than credit card rates, and student loan repayment terms are much more flexible. Make only the minimum payment on your student loans and put the extra cash towards your credit card bills instead.

If you are really strapped for cash, extend the number of years over which you agree to pay back your consolidation  loans. This will lower your monthly payment, freeing up even more cash to pay off your higher interest rate credit cards. Once you pay off your credit cards, increase your student loan payment to the original payment amount. Remember, any student loan interest you pay is a tax benefit and deductible up to certain limits-personal credit card interest is not deductible and offers zero benefits.

No credit card debt...Priceless
Digging your way out of debt will not be fast or easy. When you are feeling like the "cards" are stacked against you, take a deep breath and review these tips for reducing your credit card debt.

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