How To Eliminate Credit Card Debt: Aggressive Strategies

If you’ve run up the balance on your credit card, perhaps as a result of a job loss or other misfortune, it can seem as though you’ll never be able to dig yourself out. Fortunately, it’s not particularly difficult to eliminate credit card debt if you have the discipline to stick to a plan. As long as you have a steady income and a solid strategy, you can escape the high cost of aggressive interest that has been crippling your financial life. Most people do not realize that eliminating credit card debt can be as easy as it is.

Secure A Lower Rate

Your first step is to get your high-interest card balances transferred to low or no interest balance transfer cards if at all possible. This strategy won’t be open to consumers with poor credit, but for those with average-to-good credit it can be a very powerful debt-elimination strategy. Offers come through the mail often that advertise no interest balances for a year with low transfer fees, often less than three percent. If you are not getting these offers, do not worry, they are out there. Once your balances are transferred (even if you take the transfer fee it is less than the monthly accumulation) you can begin the second step of debt reduction.

If you are unable to qualify for a 0% balance transfer deal, you could always try to negotiate with the credit card company directly in order to get your interest rate reduced.

Start The Debt Snowball

For some, the best way to eliminate credit card debt after you have stopped the interest bleeding is called the snowball method. The debt snowball entails paying off your debts in order from smallest to largest. While this isn’t the optimal strategy financially (you would pay less total interest by paying off the highest-interest card first), there’s something to be said for the motivational power of seeing the number of bills you have to pay every month disappear. Studies have shown that people’s minds respond most positively when they see chunks of their debt fall away. So even though the card with the lowest balance may not stop the bleeding the fastest (other cards may have higher interest rates or balance accumulation), when a person sees a balance fall away he or she is mentally and emotionally encouraged by the visible progress. For that reason, I recommend the debt snowball for most consumers even though it will cost them a bit more in interest in the long run.

To follow the effective snowball method, you begin by allocating only the minimum balance due to each card but the lowest. All extra money that can be paid toward the lowest balance is then pushed toward that card. As each successive low balance card is eliminated the card is stored away (preferably cut up and forgotten) and you attack the next card in line.

If you are able to transfer balances to no interest cards, you may even be able to do away with several cards before painful interest begins to generate again. The road to escaping credit cards is a long one for many people. You may even consider getting a second job to generate more income for your efforts. If you have to endure a stressful workload for a time in order to get out from underneath debt, it is worth it. Financial freedom is ultimately the best outcome and in the long run the least stressful life to lead.