My current MasterCard statement has a little notice in the top corner stating that if I only make the minimum payment on my bill, it will take about 18 months to pay off the credit card balance.  This is on a balance of $165 and a relatively low interest rate of 5.99%.  One and a half years!

My HBC rewards card balance of $210 will take 82 months (almost 7 years!!) to pay.  I can’t even imagine how long it would take to pay off a substantial balance at the 18 -19% of most credit cards or, worse, up to 30% on retail store charge cards.

If you are currently holding a balance and continue to use your card when credit becomes available you are basically paying your future income to the credit card companies for decades to come.  Here’s how to get out of credit card debt for good.

How To Get Out Of Credit Card Debt

It’s time to get serious about unsecured debt and resolve to do everything you can to get out of credit card debt as soon as possible.  It may help to take a good look at all your statements together to see just where you stand.  You may be shocked at the total.

On a sheet of paper, make a list of all your debts including loans and credit cards.  From your statement, record the outstanding balances, the minimum payments and the interest rates.  Add up these amounts to get your total indebtedness and how much you are paying each month.  From the “minimum payment notice” figure out the exact date the card will be paid in full.

Are you shocked yet?  Pick one credit card with the best features for you and cut up the rest.  Be sure to call or write to the companies to cancel the accounts.  Keep your sheet of paper on hand to keep the information visible, especially when you’re tempted to charge “just this one” small purchase.

Now, most debt counselors will advise you to apply any money you have in savings to the balance, and start paying off the card with the highest interest first.  I have a different strategy.  Unless your savings can pay off the debt in total (or a large portion), keep it intact.

Psychologically it feels better to have an amount in your asset column, and depleting it may not make much of a dent in the liabilities column.  If you do have an unexpected expense such as the $140 I needed for a new furnace motor recently, you can use your cash rather than increasing the credit card debt further.  Also, you are more likely to think twice before using your own money for a frivolous purchase.

My approach to getting out of credit card debt would be to put every dollar I could afford onto the smallest balance, regardless of the credit card interest rates.  Again, psychologically, it gives you a boost to see one debt paid off and then an increased payment can be made on the next highest balance and so on, until everything is paid.  Then, resolve to pay the balance in full every month.

If you like, you can make up a spreadsheet that shows how you are progressing.  People who really put their minds (and funds) to it can be entirely credit card debt free in a relatively short period of time.

Take another look at the total monthly dollar amount required for credit card debt payments, then think about how you could use that money to save for a worthwhile purpose or future security instead.  It’s an empowering feeling to get out of debt.

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