Credit card debt can become a revolving door

By Ben Woolsey

If you are in credit card debt, you can count yourself as belonging to a large fraternity of Americans. 

Most people don't start out with a plan to get into credit card debt. Consumer debt creeps up on people without much notice. In fact, credit card debt is rather similar to those unwelcome holiday pounds that are so easy to put on but almost impossible to shed.

The Internet and airwaves are rife with credit card debt consolidation offers that hold out the promise to desperate victims of credit card debt of the prospect of becoming debt free. But, becoming debt free is a process that requires a complete change in attitude concerning how personal finances are handled. Those in credit card debt must form a new relationship with money to become debt free.

Credit card debt consolidation can be a good first step, if done properly. By taking revolving debt from several high-interest credit cards and moving it to one lower interest rate credit card, a person can save thousands of dollars per year in finance charges. Such 0 percent balance transfer offers are out there, but do require reasonably good credit to qualify.

For many people who find themselves buried in credit card debt with high interest rates, a balance transfer or debt consolidation loan only temporarily mitigates their financial trouble. If there is a chronic underlying problem that involves not being able to live within one's means, the specter of credit card debt will reappear down the road as sure as the sun rises in the east.

So how does one stop the revolving door of credit card debt? Probably the blest approach is to look at yourself in the mirror and decide once and for all to do something about the way you spend money. It's really just a matter of how you spend, where you spend and what you spend. Create a budget for the necessary things in life, as well as some small extravagances. Most people are surprised at how much money they waste each month when they track their cash and credit card spending.

While some debt consolidation experts recommend cutting up all credit cards, this is probably too extreme. A better approach is to keep one or two low-rate credit cards for emergencies. But the most important thing is to stop adding to the outstanding balances with new purchases. That way you can begin the long but necessary process of paying down the principal.

Published: February 21, 2005