Credit Card Debt Solutions

Dear Dr. Dave and Dr. Dee,

We have big credit card debts, but I have been paying the minimum due monthly. My husband is angry that I do not pay the full amount due. We do not have enough money in the bank to pay the amount due. We use credit cards to pay for everything so that we can get the cash rebates. Don't you think that makes sense?

Signed,

Money matters

Dear Money matters,

Charging everything with credit cards only makes sense if you can pay off the balance due at the end of each month in order to not incur finance charges nor accrue more debt. Paying only the minimum amount due creates more credit card debt because it does little to reduce the balance owed on the card and a finance charge will be added to the amount owed. Also, if you are still purchasing items with the credit card, then the amount owed continues to grow.

Below are some suggestions to cutting credit card debt:

1. Stop using credit cards. Leave the cards at home and pay for everything with cash. You will be less apt to spend your money.

2. Request a lower rate from the credit card companies.

3. Transfer credit card balances to a card with the lowest interest rate.

4. Pay off the highest interest rate credit cards first. If they are all similar in interest rate, then pay off the lowest balance first.

5. Pay off the balance due, not the minimum balance, when you can.

6. Pay bills on time to avoid more finance charges.

7. Keep a record of all expenses to figure out where you can cut back. For example, instead of going out to dinner and a movie, eat in and rent a DVD.

8. Cut back on nonessentials. Do you really need a daily latte from the coffee stand? Do the math: $4 per day for a latte adds up to $120 each month or about $1,440 per year. Make coffee at home.

9. Start saving some money for an emergency fund.

10. Start earning more money. For example, if you can, get an extra job or sell items you no longer need on ebay.