Effectively Managing Credit Card Debt: Benefit from Improved Budgeting or a Debt Relief Program

Managing credit card debt is a priority for millions of American families. The April 2009 Nilson Report showed the average amount of debt on charge cards was $8,329 at the end of 2008. The reality is that this figure is far higher because it includes those who don’t have a card. The good news is that settling credit card debt is possible as the debt is classified as being unsecured.

Managing Credit Card Debt

A financial literacy survey by the National Foundation for Credit Counseling revealed that 26% of Americans (56 million people) admitted to not paying their bills punctually. Whilst this is partially due to forgetfulness, this was largely due to an inherent lack of affordability. However, it is possible to address this issue through better budgeting, increasing income and/or a debt relief program.

Settling Credit Card Debt Through Reduced Spending

Successfully managing credit card debt without adversely affecting credit score ratings can be achieved by addressing income and/or expenditure. There are few families who are unable to save money by making a few simple lifestyle changes. Document all forms of expenditure and determine which areas could be reduced through avoiding a purchase or by identifying a more affordable alternative.

  • Use a comparison site to identify cheaper alternatives- car insurance, home mortgages etc.
  • Switch from branded to generic foods.
  • Avoid making impulse purchases.
  • Reduce social spending, especially alcohol and cigarettes.
  • Reduce transport costs by up to 75% through car pooling.

Ways to Increase Personal Income

Whilst managing credit card debt through improved budgeting is easier, it is still possible to increase income. Paying down personal debt through a part-time job can substantially reduce the amount of money that goes towards servicing revolving debt.

  • Set up as a registered childminder.
  • Rent out a driveway or room.
  • Pet sitting or dog walking.
  • Freelance writing.

Debt Relief Programs

  • Debt Management Plan. Improve affordability by paying a sum of money to creditors that is based on affordability and not the T&C’s of the credit agreement.
  • Debt settlement program. Reduce debt by up to 50% and repay the remaining balance over a period of up to 36 months. Settling credit card debt over a longer period may be possible.
  • Filing bankruptcy. Become completely debt-free in less than six months without repayments.
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Managing credit card debt when monthly repayments aren’t affordable can create great stress and anxiety. However, better budgeting, a part-time job or a debt relief program can help to address the imbalance between income and expenditure. Talk to a qualified debt counselor to find out how a debt settlement program or Debt Management Plan can be of assistance.

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