Credit Card Debt: Paying off Your Credit Cards

Are you one of the many people who have run up a good amount of credit card debt during the past several years? The credit card offers just kept coming in the mail - American Express, Visa and MasterCard all from several different banks every day with those zero percent balance transfer offers. You may have also been surprised  by a letter informing you that your retail card has been "upgraded" to a national bank credit card.

Are you in over your head because of having too much credit card debt? Now that the party is over and the credit punch bowl has been taken away, how do you pay down or pay off the credit card balances? By coming up with a plan!

The task of paying off credit card debt is possible but it won't be easy. You have to change your spending habits and become a saver. A lot of people are being forced into the saver category because credit card issuers are cutting back on credit by lowering credit lines. Several months ago, American Express offered cash to some of their credit card holders if they paid off their credit card debt and closed their credit card account.

Paying off Your Credit Cards

Start out by coming up with a realistic budget of all your current expenses. Account for all purchases - however small they are. You would be surprised at how much the little purchases add up. After you have a good idea of how much you are actually spending right now, start cutting the fat and add up the total potential savings. You will probably be pleasantly surprised how much money you can save to pay off your bank credit cards.

Involve your entire family in this decision. If you have children old enough to understand the goal your family is trying to achieve, involve them in the process of eliminating debt. Making these decisions can be stressful but involving kids gives them the feeling of making contributions and sacrifices as well. This will also help them understand any cuts that are made to their allowance or spending.  It always helps to show your children the benefits of saving and self-discipline - the sooner the better.

Now that the entire family has come up with ways to reduce credit card debt, you must keep track of all your family's spending going forward. You can either create a list like a checkbook register or a simple spreadsheet that tracks each day's purchases. There are also several personal finance software packages such as Quicken or Microsoft Money. Most offer a 30 day trial period for you to find the best fit for your family and have the added benefit of being able to download information directly from most accounts including checking, credit cards and some investment accounts.

When making purchases, use a debit card or cash if you can. If you do use a credit card, try to use a rewards credit card for everyday purchases since you can get up to five percent cash back on groceries on a cash back credit card. Have the entire family only use one debit card account or credit card account, this will make tracking purchases easier.

When making a credit card payment, be sure to pay off the highest interest rate credit card first. Keep in mind that many enticing offers of low interest rates come with a limited time and the interest rate may increase dramatically when the introductory period is over. Attack that credit card balance first by paying as much as you can while making at least the minimum payment on other credit cards.

When you have made good progress on paying down credit card debt, reward your family with a dinner out or some other pleasurable thing your family likes to do. Be sure it's done as a family so the entire family can acknowledge the progress that's been made.