Clear Excessive Credit Card Debt: Reduce Your Outgoings

Excessive credit card debt relative to your income increases the likelihood that you'll default on your credit agreements. The interest payments on serious debt start to take up a higher percentage of your disposable income so the repayments quickly spiral out of control. Better budgeting and financial planning is essential if you're to pay down debt and enjoy a better quality of life.

Excessive Credit Card Debt

According to a report by Transunion, the total debt per charge card customer was $5,710. This figure may not seem high, but it's just an average. This figure includes people who don't owe anything and this distorts the criticality of the underlying problem. Many people owe a lot more.

The High Interest on Excessive Credit Card Debt

The Consumer Action credit card survey also found that the average interest rate on charge card debt was 13.54%. The survey was conducted on 41 leading credit cards. While the APR is 1% lower than 12 months earlier, it's an expensive way of borrowing money.

Better Budgeting

On just $5,710 at 13.54%, you will make interest payments of $773.14 per annum. Serious debt problems leave you with progressively less money each month. However, by reducing outgoings and introducing better budgeting methods, it's possible to save money that can be used to pay down debt. If your outgoings are higher than your income, it's essential that this problem is addressed.

Ways to reduce Excessive Credit Card Debt Through Better Budgeting

The key to saving money is an analysis of all of your outgoings. Consider introducing these suggestions into your new lifestyle:


- Online comparison service. Compare prices of all leading products and services online before making a purchase. This isn't just possible for white goods, it can be performed for insurance, financial products and overseas holidays.

- Social spending. Reduce the amount of money that you spend on social activities, especially drinking and smoking.

- Use vouchers. Take advantage of vouchers when buying food and paying for different forms of entertainment. There are deals available that can reduce your outgoings.

- Eat at home. Eating food at home is a great way of saving money. Regular restaurant visits can add hundreds of dollars to your outgoings. Avoid buying food and drink at work and take a packed lunch with you instead.

- Remortgage. If your mortgage term has ended, get a remortgage in order to benefit from a lower rate of interest.

- Rent a smaller property. There's no point in one person renting a three bedroom house. Move to a smaller property and reduce the amount that you spend on accommodation.

Excessive credit card debt can be reduced through better budgeting, a second job or a debt solution. Use the money saved to pay down debt by using a few of the ideas alluded to above. The more debt you clear now, the more disposable income you'll have each month.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.

Updated: 28 March 2011