DIY Network

How to Get Out of Credit Card Debt Find out how to get out of credit card debt. From "Home Made Easy" episode DHME-103

Guest Matt Heimer explains the steps to get out of credit card debt and the traps that lead to financial trouble.

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Guest Matt Heimer joins Stephanie to share tips on cutting credit card debts.

How to Get Out of Credit Card Debt

Current outstanding debt on credit cards--that's the "revolving" part that people pay every month--totals nearly $700 billion, up from just $50 billion in 1980. Three out of five American families can't pay off their credit cards each month in full. Many people don't even have a realistic idea how much they owe in total because they have debts on several different cards.

• The first question that everyone who is in debt should ask themselves is "How did I get here? What have I been charging that I shouldn't have?" You know that debt has become your lifestyle if you can only make the minimum payment on your credit cards.

• Gather all your credit card statements and find out what the percentage rate is for each card. If you have to keep using a card, use only the one with the lowest APR or interest rate. Once you know what you owe, take any credit cards that you have maxed out, cut them up and throw them away!

• If you are in debt with several different cards, you need to pay off the credit card with the highest interest rate first because they are costing you the most. There is a myth that you should pay off the smallest debt to get rid of one card faster.

• Call your credit card companies and see if you can talk your way into lower interest rates. One negotiating tactic--point out that you are getting competing offers in the mail all the time from other cards with lower rates. With one five minute phone conversation, 56 percent of consumers who called their credit card company were able to lower their annual percentage rates, according to a study by the Massachusetts Public Interest Research Group.

• Some experts suggest putting $10 a day aside to start putting into your credit card debt. Put this money in a jar and it will add up.

• Every year, credit card companies send out billions of checks that you can use "like cash" to shop or pay bills. All those checks do is translate into instant credit card debt with extra transaction fees on top of that.

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