Credit Card Debt

When you consider that the average American family has seven credit cards and the nation’s credit card debt is nearly $800 billion, it’s clear that these cards play a big role in our everyday lives. Credit cards provide many useful services including convenience, protection on purchases, a means of establishing good credit ratings, tools to rebuild credit, and a way to access cash when you’re in need. But having too much credit card debt can be a concern.

Manage your credit card debt wisely

The fact is, there’s nothing wrong with credit card debt — if you manage it carefully. But getting in over your head can have disastrous effects on your financial well being and you may find yourself with huge monthly payments, maxed-out credit cards, and late or missed payments resulting in a damaged credit score.

Helpful credit card debt articles

The credit card debt content on this website will help you learn about credit card debt, including:

The pitfalls of minimum payments
The pros and cons of debt consolidation
How to deal with bad credit
How to work with your credit card company

Is your credit card debt out of control?

Learn to recognize the warning signs that your credit card debt is out of control. If any of the following apply, you may have a problem:

You use credit cards for daily expenses like groceries and gas
Your credit cards are maxed-out
You make only minimum payments
You have no savings
You spend more than you earn every month

It’s possible to manage your credit card debt by doing a little research when you’re shopping for a new card. Find credit cards that offer you the best deals on interest rates, fees, transferred balances, and incentives. If your current credit card debt is too high, make a concerted effort to pay off each one, starting either with the cards with the highest interest rates or with the cards with the lowest balances. You can also call your credit card company to see if they’ll lower the interest rate for you (many will, it’s a very competitive market).

With a little knowledge, you can find the tools to help you understand and live with credit card debt.

A Strategy for Paying Off Your Credit Cards

The average American owes more than $8,500 in credit card debt. When used wisely, credit cards are a useful tool and can help earn a good credit score. However, many consumers find themselves overwhelmed by debt resulting from overspending and making minimum monthly payments. This combination can be extremely damaging to your personal finances. If you’ve found yourself in this situation, it’s time to commit to paying down your credit card balances.

Dealing with Bad Credit

Dealing with bad credit can be challenging, but it doesn’t have to mean financial ruin. There are a number of methods to repair your credit including debt consolidation, secured credit cards, and even negotiations with credit card companies. If you're dealing with bad credit, one or more of these solutions can work for you.

Freeing Yourself from Excessive Credit Card Debt

When overspending turns the convenience of carrying a credit card into a debilitating cycle of budget-busting monthly payments, maxed-out credit lines, and damaged credit scores resulting from late or missed payments, you are living the very real nightmare of excessive credit card debt.

How Credit Works

Credit affects so many aspects of our lives, it’s hard to imagine living without it — and it can be very difficult to achieve your financial goals if you don’t have it. Good credit allows you to qualify for credit cards as well as for loans for many things including homes, cars, and college. Your credit standing may also weigh heavily in the scale when you’re being considered for a new job or when you’re being approved for a home or apartment lease. It can also be a consideration in lowering your insurance rates. It is clear that having good credit can make our lives much easier.

How to Budget Credit Card Payments

Anyone with multiple credit cards knows that learning how to budget credit card payments is an essential part of good financial health. Making minimum monthly payments is not an option if you’re trying to get out of debt. Instead, your goal should be to send a bigger payment that is high enough to reduce the principal and not just the interest on every card. If this is not within your means at the moment, don't dismay: you can still take the first step to create a budget that will get you out of debt. Here are a few tips.

How to Work with Your Credit Card Company

Armed with a few facts, you can learn how to work with your credit card company to obtain lower interest rates. The first thing you'll want to do before beginning your conversation with your credit card company is to find out what your credit score is. You can do this by checking your FICO (Fair Isaac and Company) score at www.MyFICO.com or at the website for any of the three credit bureaus — TransUnion, Equifax, or Experian. You'll be better able to work with your credit card company if you have an accurate idea of where you stand as a cardholder.

Pros and Cons of Debt Consolidation

For consumers whose debt involves multiple creditors and had become a difficult burden, debt consolidation can spell financial salvation. As with any type of loan, however, debt consolidation has both pros and cons. For example, if you continue to overspend after you consolidate your debt, this type of loan won't help you for long. In fact, you may end up much deeper in debt than you were originally. On the other hand, those who can make a commitment to serious change can reap the many benefits of a debt consolidation loan.

The Real Cost of Credit Card Purchases

Have you ever wondered what purchases on credit cards are actually costing you? If you’re like many credit consumers, you may think only of the original cost of the merchandise or services you charge on your cards, but by carrying a balance from month to month, the interest and fees assessed to your account can add substantially to the cost of the items or services you originally purchased.

Do You Need a Credit Counselor?

If you’re swimming in debt that you can no longer manage, you may need the help of a reputable credit counselor. Runaway interest and penalties can make it impossible to meet minimum monthly payment requirements, particularly if you have more than one credit card. Add a mortgage, car payment, or student loan into the mix and it can seem like there’s no way out.

How to Consolidate Credit Card Debt

If you’re drowning in a sea of credit card debt, a consolidation loan to pay off your cards and give you a single — usually lower — monthly payment, may be an answer. But before you decide to get a consolidation loan, it’s worth noting that more than two-thirds of consumers who obtain this type of loan max out their credit cards again within two or three years, resulting in twice the debt they had in the first place.

Pitfalls of Making Minimum Payments

As many Americans have discovered, making only the minimum monthly payments on your credit cards can be a big financial mistake. When your budget is tight, sending the smallest payment the credit card company requires may seem like the best course of action but, in reality, this practice may only put you deeper into debt if you continue to use your cards.

Tips to Pay Off Your Credit Cards

With concerns about the economy increasing every day, and the cost of everything from gasoline to groceries on the rise, many consumers are looking to rid themselves of credit card debt. The high cost of credit, with interest rates and fees, makes the thought of paying off credit card balances more appealing than ever.

Using Credit Wisely

Having good credit is a very desirable thing in our society, and it’s difficult to accomplish your financial goals without it. But too often for many Americans, credit card debt spirals out of control and becomes a crippling liability, wreaking havoc on personal finances that may take years to recover from.