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Paying credit card debt

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Credit card debt is the easiest sort of debt to accrue, but the hardest sort to pay off. That's because it usually carries such high rates of interest that borrowers can easily find themselves merely servicing the interest payments and not making any dent into the capital outstanding.

The first step to getting rid of credit card debt is to acknowledge that you will have to actively do something to get rid of it. You can't just carry on hoping something will turn up like a pay-rise or a new job or a lottery win. Actually making the decision to take action is the hardest step.

Next, keep a spending diary for at least a month (preferably two months) so that you become aware of where exactly your money is going. Many people spend unconsciously on a lot of small things that add up. Once you are aware of your spending habits, you can take action to change them.

The vital thing here is to reduce your spending so that you have enough spare cash so you can begin to clear your debts. It goes without saying that you should not spend any more on your credit card while undergoing this exercise. If you have got seriously behind with your payments, the lender will have withdrawn the facility anyway, and will probably be chasing you with phone calls and letters to get their money back.

If you are in arrears, you need to take drastic action, including selling some of your stuff (including your car) to settle your credit card debt.

Debt makes people poor. They allocate so much of their earnings to paying interest that they never get the chance to build up any wealth for themselves. Therefore paying credit card debt is vital if you are to have the chance of a moderately successful stress-free life.