Credit Card Debt Elimination
by Paul Smith
Wouldn't it be great just to snap your fingers and have instant credit card debt elimination? No matter what you hear or read, on the Internet or otherwise, it's a dream, a fantasy.
Sure, there are services that claim they can get rid of it for you in so many months, but think for a second about how logical that is. You borrowed money from a billion-dollar company. They want it back. Do you think you have any legal recourse to just make it go away?
In a word, no.
Great, so now that we got that out of the way, now what?
There is only one way to have complete credit card debt elimination: don't use the cards anymore. That's right, get rid of them. In fact, just take out some scissors right now and cut them up, OK?
Whoa! Not so fast!
While you do eventually want to get rid of your credit cards, first, let's
step through a few action steps that you need to take before you get to that
point.
1) Get a cash reserve first
The first thing you need to do before you cut up those credit cards is replace your "credit card emergency fund" with a real emergency fund. If you really want to eliminate credit card debt, then the first step is having a cash reserve in place when something goes wrong.
Think back and consider how you paid for that car repair, home appliance or medical visit. Did you write a check or pay in cash?
Getting out of debt has to start with a cash reserve before you do anything else so you are not depending on the credit card when an emergency comes along.
2) Know what you'll use instead
The other great excuse to not pay off credit card debt is the, "how else will I eat out or rent a hotel room" reason. In many countries, especially the United States, there is a thing called a Debit Card.
Today, these can easily be used in exactly the same way as a credit card. The great thing is, you don't go into debt using them since what you are paying for comes straight out of your checking account.
If you don't have one of these you need to get one. They are an essential element for being able to erase credit card debt simply because they take away the above mentioned excuse.
3) Consolidate
The third step to total credit card debt elimination is consolidating some of your cards into one loan, but ONLY and I emphasize ONLY if it makes sense. Sometimes it doesn't.
The only reason you should consolidate is if you have multiple (keyword is multiple) high-rate credit cards.
First, consolidating them is probably the most effective way to get them to the lowest possible rate and second, it greatly simplifies the bill paying process.
But use a lot of caution here. You don't want a debt consolidation loan that will consume a credit card whose interest rate is already lower than the consolidation loan you are considering.
Also, be wary of the terms of the loan. High fees and penalty rates will not help you eliminate credit card debt any more than a high interest rate will.
4) Close the account, permanently
It's one thing to call up a company and ask them to close your account, it's quite another to do so in writing. While you can still pay off credit card debt for an account that's closed, a phone call may not actually close the account.
Worse, your credit report might show that it's closed, but not for the reasons you want, i.e. that you chose to close it.
When you are ready to properly close a credit card account, THEN you can cut up those cards. I know it's hard to do, but hey, this is credit card debt ELIMINATION after all.
Do NOT throw that chopped up card away though. You are going to mail it.
You need to write a formal letter explaining that you are permanently closing your account. When you do so, be sure to include the following instruction: "Please notate this account, in any reports to the relevant consumer reporting agencies, as 'Account closed by card-holder request.'"
This will ensure that your credit report remains intact.
Now, put the cut-up pieces of your card into an envelope, along with the letter and mail it off.
5) Pay it off
Complete credit card debt elimination is now on it's way. Simply pay down your credit card debt as much as you can each month. Do not pay minimum payment, pay more, even if it's just a buck. Pay as much as you can each month.
At this point, it's just a matter of time. With some patience and consistency, credit card debt elimination will become a very real reality!
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