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6 steps for lifting the burden of credit card debt

October 05, 2010

By Barbara Marquand | Money Rates Columnist

You're not alone if credit card debt weighs you down. Almost half of Americans - 47 percent - carry credit card debt from month to month, and 19 percent expect they always will, according to the 2010 MetLife Study of the American Dream. Not surprisingly, a quarter of those polled say stress about credit card debt is keeping them up at night.

Want to sleep easier? Take these six steps to lighten your load.

1. Face credit card reality

End denial. Add up the debt on all your credit cards and take a look at the interest rates you're paying.

2. Open up

People struggling with debt often hide their financial trouble from others, according to a survey this year by GreenPath Debt Solutions, a Farmington Hills, Mich., credit counseling service. When consumers call the service for help, they frequently say it's the first time they've told anyone about their credit card debt problems.

Hiding credit card debt from your spouse or partner - financial infidelity - is a relationship killer. If you've been keeping your credit card spending a secret, it's time to tell your significant other what's going on. A recent American Express poll found that almost a third of Americans have hidden purchases from partners and 27 percent have lied to a spouse about how much they spent on a purchase.

3. Stop adding to credit card debt

Use cash instead of charging purchases, and resist the impulse to get new credit card accounts to fuel your spending.

4. Set a household budget

How will you make ends meet without charging everything? Set a budget and determine where you can cut expenses to find money to pay down your debt.

5. Start paying down credit cards with the highest interest rates

Focus on paying as much as you can toward the credit card with the highest interest rate, while keeping up with minimum payments on all of your other accounts. Once you've paid off that credit card, focus on the account with the next-highest interest rate and so on. Continue until you've made your way through the debt pile.

6. Get help

Credit counselors help people get to the root of their financial problems, set up household budgets and, if necessary, negotiate payment plans with creditors. Get referrals to reputable, non-profit credit counseling services, such as those affiliated with the National Foundation for Credit Counseling. Look for an agency that employs trained counselors and offers a broad array of services, such as classes on budgeting and saving money. Avoid firms that charge upfront fees or tell you to stop paying your bills and talking to your credit card companies.

Out-of-control credit card debt is often a symptom of a larger problem, such as depression or anxiety. Are you spending to quell pain? Seek emotional support and counseling if you can't get a handle on your spending.

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