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According to a recent report by NerdWallet, the average American household has thousands of dollars in credit card debts. The report also states that it’s actually getting harder for households to pay off debt as the increases in cost of living outpaces income growth.

If you find yourself with a high credit card debt, it’s a no-brainer that reducing it is a top priority. The more time that the balance stays high, the more you’ll need to pay in interest. In some cases, the total of debt interest paid can almost be as high as the original balance of the debt.

Swift and decisive action is necessary to get rising credit card debt under control. If you feel that your debts are mounting, you’ll want to consider this strategy to slam the brakes on your road to financial troubles:

How much do you really owe?

The first thing that you have to do is determine how indebted you really are. Write down what you’ve been borrowing for, how much you owe on your credit cards and what the interest rates are for each item. By knowing how what you need to pay and in what order, it’s easier to set your goals.

Budget and Reduce Expenses

Study the expenses you made for the last year on your credit card statements. Highlight which expenses must be budgeted for: utilities, rent, food, debt payments, and other necessities. You can then use the values of past expenses as a basis for your budget.

Trim your expenses. You’ll have to decide on what expenses you can cut off. If you find that you are unable or unwilling to give up an expense, try cutting back on it. This has been proven to reduce the shock of lifestyle changes and can still end up saving you money. This can be as simple as turning up the thermostat on your air conditioning unit or cutting down on how often you go out for dinner.

Any amount saved in your budget can then be funneled to paying down your credit card debts. The short-term goal is to bring down the debt’s balance and thus lower the interest payments.

Ask for Lower Interest Rates

Call up your credit card companies and politely negotiate for lower interest rates. A one or two percentage point difference in interest rate can save you up to several hundreds of dollars.

Keep in mind that lenders have different policies on how they handle such requests. While having a good credit score and payment history usually helps, your request may still get rejected.

If you’re fortunate enough to have your interest rate lowered, make a commitment to make the payments on time. Late or missed payments are usually the triggers to terminate the lower interest rate arrangement and revert back to the previous rates.

Transfer Balances (Optional)

Transferring balances to a low-interest or zero-interest rate credit card has been a top recommendation from credit experts. If done correctly, it is a smart move that can save you hundreds of dollars in interest payments.

However, this action must be taken with caution. Do not forget to factor in the transfer fee when making your computations to determine if this method is right for you. You must also be able to commit to pay off the balance within the introductory period. Any missed payment can cancel the low interest rate and make you pay the normal rate. Carefully read the terms and conditions before transferring the balances.

Pay off one card at time

If you’re able to pay more than the minimum amount, it’s recommended that you target one credit card at a time. Adjustments in your lifestyle can generate the financial breathing room that separates having money for just the minimum and being able to cover extra debt. Doing this allows you to reduce the principal amount owed, which in turn also lowers the interest you’re obligated to pay.

Once the target credit card has been paid off, the money that you’ve been setting aside for that card can be allocated to the next one. If you’re not sure which card to prioritize, here’s what you should consider:

  • Avalanche – Target the credit card with the highest interest first. You want to bring down the balance of this card as fast as possible in order to save on interest payments.
  • Snowball– Target the credit card with the smallest balance first. For a lot of people, paying off a debt is a good psychological boost. It is palpable proof that your efforts are successful, and it motivates you to continue with your efforts.

Use cash

Pay for groceries and utilities with cash instead of your credit card. You’ll want to avoid increasing your debt as much as possible. If you find that you’re having difficulty adjusting, leave your credit card at home.

Using cash also has the added benefit of making you more conscious of how much you are paying. Unplanned or impulse purchases are minimized, helping you keep within your budget.

Credit card debt is better dealt with sooner than later. The longer you deny the problem and wait, the worse it gets. Give yourself and your family greater peace of mind by taking control of your financial responsibilities today.

To learn more about debt relief solutions and how to start living with financial freedom, contact CreditAssociates for a free consultation or use our Savings Calculator to see how much you could save.