Credit card debt can cause you huge problems. These debts can grow fast and getting rid of them can be a tough battle for many people. It can be difficult to pay off these debts and get rid of them forever without good planning. The following plan can help you step by step to get rid of the huge debts that credit cards can cause and to get your checking account back on track.
Steps
Method 1 of 1: Get rid of Credit Card Debts
Step 1. Get rid of your credit cards
The first thing you need to do is get rid of your credit cards. If you continue to use your credit cards, being able to pay off your debts becomes almost impossible. You should cut them so that you can no longer use them.
Step 2. That said, don't close your checking accounts until you feel it necessary
Having an account with an available line of credit makes a good impression on your credit profile.
Step 3. Collect all credit card bills
You need to group all the most recent bills from each credit card you have. You will need invoices to determine the exact amount of your debt, so you can start drafting a repayment plan. If you are missing any invoices, contact your finance company to have a copy sent to you.
Step 4. Review your credit card bills
You will need to review each invoice to make a list that details the composition of your debt. On your list you must have, for each credit card, the name of the card, its balance, the interest rate and the minimum monthly payment. Also note if you have exceeded your card limit and if you are charged a penalty or surcharge for this.
Step 5. Calculate the total amount of your debt
Add up all your credit card balances to determine the total amount of your debt.
Step 6. Establish your monthly budget
Now that you know exactly what amount you owe, it's time to determine how much money you can allocate to repaying your debt. You should establish a budget that takes into account your earnings and all your expenses. You don't have to include credit card payments in your budget at this stage. Subtract the total of your expenses from the total of your earnings to establish the amount available each month to be able to pay off your debt.
Step 7. Create a repayment plan for your debt
Now that you have established your total debt amount and your monthly availability, you can create a debt settlement plan. There are many strategies you can use to pay off a debt. Most people believe that the best strategy is to start with the cards that have the least debt and liquidate them. This way you should pay the minimum amount allowed on all your cards. Any surplus money should go to pay off the card debt with the smallest balance. Using this strategy works, as it allows you to achieve tangible results in no time. Smaller debts are paid off quickly and there is a pleasant feeling of accomplishment.
Step 8. Review your debt every month
Every month you need to review the current balance of each of your credit cards. If you notice any surcharges or something that doesn't come back to you, you should contact your finance company immediately: the last thing you want is an additional debt. Your goal now is to settle all your debts and get rid of them completely.
Step 9. Establish a budget each month
Your earnings and expenses may differ each month, so it's important to recalculate your budget each month and make the necessary changes. This will ensure that you always know where your money is going and will prevent you from having financial problems again, a situation in which you could return to using your credit cards again.
Step 10. Delete each card after you clear it
The moment you clear a card debt, you will need to eliminate it. This will prevent you from taking on further debt.
Step 11. Follow the program
It is very important that you follow your repayment plan. Examine your budget, your expenses and completely stop using cards. Make sure you always have things under control and monitor your debt situation.
Step 12. Try to always pay more than the minimum allowable installment
This way your debts will pay off faster and the interest rate will be lower.
