How to Escape Your Mounting Credit Card Debt Financial Situation

Like we talked about in our previous post Consumer Debt Worst Offenders: Banks, Advertisers, and Advisors, there’s a lot of financial entities out there more than willing to help you part with your money. It’s big business and consumers are getting hit with the worst of it. So what can we do to not be a financial victim?

The best option is always prevention. The easiest way to live free of debt is to not get into debt in the first place. Even if you’re already up to your neck in debt, there are ways to climb out and ways to reduce the amount of debt you currently have – you just need to have the right strategy.

Always pay the full balance of your credit cards each month when you receive your credit card statement. Otherwise, don’t use your credit cards! If you think you’ll be unable to pay the balance off in full when you get the statement in the mail, then you don’t need that item or service you were thinking of buying. If you think you won’t be able to pay off the balance yet you still feel that pressure inside you wanting to buy that item ask yourself what’s more important, your financial future or more stuff in your life?

If you aren’t disciplined enough yet to be able to pay your full credit card balance each month and not spend more than you can a month on credit then there’s only one option for you. Grab a scissor, take all your credit cards, cut them into miniature pieces, and throw them in the garbage. Just keep that one emergency credit card mentioned in the previous article and throw out the rest.

If you’re deep in debt, you know you won’t pay off your balances each month, yet you don’t want to cut up your credit cards then the reality of the situation is that you’re heading straight down the path to financial disaster. You have to be able to stop this vicious cycle of credit card indebtedness.

The way to getting control of your credit card spending is to learn to associate your present negative financial situation to the virtual slavery of credit card debt. Take out your wallet or purse, pull out all your credit cards and lay them out in front of you. Realize that these credit cards are like keys locking you into a virtual cage of financial prison. Visualize all the negativity that these cards have brought into your life due to faulty spending habits. Remember the debt that these credit cards have caused; remember the huge monthly payments that seem to keep growing and growing. Grab the nearest scissor and cut these cards up. This is the first step toward financial freedom.

Once you’ve destroyed your credit cards, find yourself a no-fee credit card with great rates so you can start on your new financial strategy of Pay-It-In-Full. Now you can transfer as much of your old credit card debt into this new card and take advantage of the usually very low fees for the first year or so (sometimes you can even find no interest credit cards that offer this for the first twelve months). This can significantly drop your credit card monthly payments and allow you to start paying down the total balance as well as everything you used the card for in that month. This allows you to pay more of the principal and less of the interest. Just be aware that this is a true transfer and not a cash advance which usually carries high interest rates.

There are also many credit cards out there that offer great rates if you use that company’s services or products. For example, the Health Care One Mastercard allows users to save from 20% to 40% on health care and physician visits, the Amazon.com Rewards VISA Credit Card gives you points that can be redeemed for gifts (including flight tickets, airline miles, hotel stays and more), and uStudent Credit Cards offers credit card matching for students to get credit cards that meet their needs.

Cashback bonuses can also sometimes be a big incentive to use a particular credit card that you know you’ll be paying in full anyway when the statement comes. The Discover Business Card gives you 5% cashback bonus on office supplies, 2% cashback bonus on gas and up to 1% cashback bonus on all other purchases. Another credit card with an interesting premise is the Discover Motiva Card that pays you a full month’s interest for paying ontime and with no annual fee.

Whenever you’re applying for a credit card make sure to read the fine print and never sign up for a credit card when you don’t understand the terms. Call the company and find out directly from the company representatives.

Bottom-line in improving your credit card financial situation is self-discipline. Only order a new credit card when you’ve paid off your old ones via balance transfer. Once you’ve done this, cut up the cards and cancel the account in writing with a subsequent phone confirmation.

Keep yourself disciplined and you, not the credit card companies, will be in control of your finances.

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• Using Your Home Equity Loan to Pay Off Credit Card Debt
• 8 Ways To Improve Your Credit To Get a Mortgage
• The Debt Destruction Technique: Destroying Debt One at a Time
• Consumer Debt Worst Offenders: Banks, Advertisers, and Advisors
• The Major Role Credit Plays in Real Estate Financing
• Should I Refinance My Home To Pay Off My Debt?
• 8 Steps to Getting Your Finances in Order For a Mortgage
• The 10% Debt Reduction Plan
• How To Get a Free Credit Report
• Rule to Grow Rich By #2: Refinancing Your Home