Clear Excessive Credit Card Debt Through Better Budgeting

Excessive credit card debt plagues millions of American citizens. The higher your income-to-debt ratio, the greater the probability of financial difficulties and defaulting on one or more of your credit agreements. The interest payments on serious debt start to take up a higher percentage of your disposable income as the amount owed starts to escalate. Better budgeting and financial planning are essential in order to pay down debt and enjoy a better quality of life.

Excessive Credit Card Debt

According to a report by Transunion in December 2008, the total debt per bank card borrower was $5,710. This figure may not seem high, but it is only a median figure. Debt averages always include those who don't owe anything and this distorts the criticality of the underlying problem; many people owe a lot more than $5,710.

The High Interest on Excessive Credit Card Debt

The July 2008 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. Whilst the APR is 1% lower than 12 months earlier, it remains 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 is possible to save money that can be used to pay-down debt. If your outgoings are higher than your income, it is absolutely essential that this problem is tackled.

Ways to reduce Excessive Credit Card Debt Through Better Budgeting

The key to saving money is a fundamental analysis of all outgoings. Consider introducing one or a combination of the following into your new lifestyle:


- Online comparison service. Compare prices of all leading products and services online before making a purchase. This is not just possible for white goods (fridges, washing machines etc), it can be performed for insurance, financial products and even foreign 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 a number of deals available that can cut outgoings substantially.

- Eat at home. Eating and preparing food at home is a great way to save money. Regular restaurant visits can add hundreds of dollars to your total outgoings. Similarly, try to avoid buying food and drink at work. Take a packed lunch with you to reduce costs.

- 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 is little point in one person renting a three bedroom house. Move to a smaller property in order to reduce the total amount spent on accommodation.

Excessive credit card debt can be reduced through better budgeting, a second job or even 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, the more disposable income you will have available at month-end.

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.