It’s estimated that about half of American households now carry credit card balances

It’s estimated that about half of American  households now carry credit card balances from month to month.The average household credit card debt is $10,000, so if you have difficulty paying your balance off each month, you are not alone. Educating yourself about credit can increase your chances of using it wisely, but what happens when you are just barely making that minimum payment? There are things you can do to help you feel more in control and less in fear of your credit card debt situation.

Track Your Expenses

Remember when you had that weekly allowance, and your parents told you that if you saved enough each week, you could buy that toy you wanted so much? It is time to renew that mode of thinking.Tracking your expenses will show you exactly how much money you bring in, and how much you spend. You can then assess how to change your spending patterns and pay down credit card debt.You can choose different methods to track what you spend. Carry a small note pad with you if you use cash often. Use the Transaction Register that your bank provides to track purchases or checks. Write down every single dollar you spend, whether in cash, debit card purchase or check. If you must use your credit card to buy something, write that also in your register as an expense.

Assess Your Spending

When you have tracked your expenses for one month, sit down and assess what you have spent using major categories, either on paper or using Excel or another tool like Microsoft Money.

Major categories might include:

· Monthly rent or mortgage plus related costs (e.g., insurance)
· Utilities (gas, water, electric, sewer, garbage collection, etc.)
· Car payment(s), including insurance, maintenance/repairs, and gas
· Food, including groceries and eating out
· Student loans or educational expenses
· Credit card minimum monthly payments
· Medical expenses (including OTC medication, doctor co-pays, prescriptions and anything not covered by insurance such as massage therapy and chiropractic visits)
· Clothing and related items
· Household items (e.g. toiletries, cleaning products, repairs, stamps)
· Telecommunications (phone, cell phones, internet, cable, subscription services like radio or movies)
· Personal items (haircuts, manicures, cosmetics, gifts for others)
· Entertainment

Your ultimate goal is to spend less than you earn. If you are spending more money than you are earning each month, you need to analyze what expenses you can reduce. This is the first and most important step in eliminating your credit card debt. 

Be Honest about What You Need and What You Can Do Without

When you assess your monthly spending, you will be able to see spending patterns and where you may be able to save money. Do you really need that manicure or massage each month? Can you get a better rate on your cell phone? Can you shop in bulk or at places that have better prices? Can you cut down on eating out for lunch or dinner? If you can decide what you can really do without, you can then erase that from your monthly spending.

Start a Regular ‘Emergency Savings’ Plan

Set aside a certain amount of money each week, even if you have to start small with just $10-$20. This will become your ‘emergency fund.’ Building up an emergency savings fund will help to eliminate your use of credit cards when an unforeseen event occurs, such as a major car repair. If you can build this savings up to cover at least three months worth of expenses, your preparedness for a major catastrophe, such as a job loss, will improve.

Decide Which Credit Card to Pay Down First

Instead of paying extra on your credit cards whenever you have extra money, develop a plan to pay one credit card off first, paying the same amount each month. It may be the one with the highest interest rate, or the one with the lowest balance. Paying off one card will give you the confidence to realize that you can pay the others down. Avoid spending on these cards, thereby building your debt up again. Pay the remaining balance and do not spend any more on that card.

Always Pay Your Bills on Time

Failure to pay your credit card bill on time each month will not only add a high fee to your account (sometimes up to $40 for a late payment), it can also affect your credit score. This goes for most other bills as well. The better your credit score, the more leverage you will have to potentially lower your interest rate. A better credit score will also bring you more credit card offers. This gives you a choice of better interest rates and additional card features, such as reward points for everyday purchases or cash back based on the amount of money you've spent.

Ask Your Credit Card Company for a Lower Annual Percentage Rate (APR)

If you have a good credit score, you may be able to negotiate your APR with your credit card company. According to Truth about Credit, in a survey of 50 consumers, 56% of those who asked for a lower APR were successful in lowering it by an average of 30% or 15 points. This can save you money on interest rates each month. 

Read the Fine Print before Using Balance Transfers

If one of your current credit cards, or a new card invitation, offers a low interest rate on a balance transfer, read the fine print carefully before consolidating your debt. Balance transfers with no fees can potentially save you hundreds of dollars in interest per year. However, if you miss one payment or go over the limit on that card, you could see your APR rise to an astronomical rate as high as 22-25%. If the company can guarantee a low rate for the life of the balance, this is ideal. If the balance transfer rate is only good for 6 months or one year, ask yourself whether you can realistically pay off the entire balance in this timeframe.

Don't Be Tempted by More Credit Offers

Do not open new lines of credit, especially pricey department store accounts, even though they may offer tempting deals. Retail credit cards traditionally have much higher interest rates. If you must pay with credit that offers a 12-month 'no interest' deal (such as a furniture retailer) then make sure you pay off the entire amount by the due date, otherwise you will be paying the accrued interest from that 12-month period. Using cash may be preferable, although some people prefer to use their debit card in order to track receipts. Constant tracking and managing of your accounts, without adding any new ones, will ultimately help you to eliminate your credit card debt over time. 

Further Resources for More Information:

· Truth About Credit
· Consumer Credit Counseling Service
· Consumers Union
· Federal Trade Commission