Whichever method you choose, if you are seeking to reduce your debt, start with the lowest balance due and pay that card off. Once you’ve done that put the card away and don’t use it. Do not cancel the card. Then move on to the next card. Remember to keep all of your cards current. Most people don’t run into trouble until they start having to pay late fees and often a late fee is sufficient to cause a card to go over limit. Once that happens, you can easily find yourself in a vicious cycle of paying late and over limit fees.

A good financial manager or accountant can help you set up a payment schedule that pays your bills without straining your resources. Repaying your credit cards and limiting your spending is an excellent way to improve and maintain your credit score. Once you have an excellent credit rating, banks will apply lower interest rates on your loans. That’s all to the good for you.

Once you’ve repaid your credit cards, it’s easy to start using them again. Try not to do that. By maintaining a steady low balance, you show your creditors you are a stable and reliable risk.

This does not mean you have to pay it all at once, or even in a way, that bankrupts you. Most credit card companies will negotiate the interest rate on your card. They will work with you to ensure they are paid. You also have other options.

The first thing to remember is this: Do not cancel your cards! This will negatively affect your credit rating. Having established that fact, let’s look at ways you can use to improve your situation.

Gather all your credit card bills together, sit down with paper and pencil, and start listing your cards, the amount due, minimum payment due, and the interest rate on each card. Your primary target in this step is going to be the interest rates. Contact the issuer of the card with the highest interest rate and ask them to reduce it. You may need to explain your circumstances. Most issuers, though, would rather lower the rate than have to deal with an account going into collection status. When you lower the interest rate, you will also lower your monthly payment. Do this with every card.

Next, if you can, transfer the balances of your higher interest rate cards to your lower ones. Now put those cards away. Once you’ve reduced your cards to a manageable number and amount, determine how much you can pay on each card. Start with the card that has the lowest balance and pay more than the minimum due while you maintain regular payments on the other cards. Once you have paid off each card put it away and save it for emergency use only.

Credit debt management: Usually, you will hire an accountant or other representative to help you with this. They will budget your finances and assume responsibility of bill payment for their fee.

Credit card debt consolidation: Often you may qualify for a personal loan or a home equity line of credit and consolidate all your loans. You borrow the total amount you owe to creditors and pay them from the loan. This leaves you with a single lower payment in most cases. The trap to this option is that many people start accruing credit card debt again almost immediately.

Credit card debt reduction: If life circumstances diminish, your ability to repay your credit card debt you can negotiate to lower your interest rate and reduce your monthly payment.

Credit card debt settlement: This is when your credit card company offers you a lower total amount due for immediate repayment. They most often do this when they fear you will be declaring bankruptcy in the near future.

Credit card counseling: This is the last option before bankruptcy. An agency agrees to negotiate on your behalf with your credit card companies. You will pay the agency a single payment every month and they will distribute the funds. You will not be able to acquire new debt while in counseling and many agencies will require you to take debt management classes. These classes are usually free of charge as are the services of the agency, though most request a modest donation. In this effort, it is important to choose a reputable agency with a good relationship with your credit card companies.

There are several ways to maintain your credit. The first, most important step is to contact your credit card companies and try to renegotiate the terms of your credit. The simple fact is that when you default on a credit card it damages the card company as well as you. They are aware of this even if they initially take a hard line stance. Of course, they want the debt paid according to the original terms of the agreement but circumstances change and in the end, all they really want is for you to pay the bill. That puts you in a position of strength. Use that strength to work out a way to pay the debt more comfortably. You may have to freeze the activity on your account for a time but that will have less of a negative impact on your credit than defaulting on the loan.

Of course, the best way to manage your credit card debt is to take control of it before you find yourself in a difficult situation. Pay the balance due every chance you get and if you can’t pay that, then make a double or triple monthly payment. Most importantly, remain vigilant about your spending. It’s one thing to put an evening on the town on a card and quite another to use the card for convenience when you don’t have cash for a small purchase. Last, avoid using the cash advance option on your card. The interest rate on this option is significantly higher than making purchases.

Consolidation is the process of acquiring a secured line of credit, usually a personal loan, sufficient to cover the pay off amount of all your credit cards and paying them off. You have one payment that is usually significantly smaller than your combined credit card payments. Your credit cards are still active unless you choose to close the account at the payoff.

For many people the question is when to consolidate. A good indicator is the amount of available credit on your cards. For instance, if 3 out of 4 of your cards have little or no available credit, then you should definitely consider consolidating. At this point, you also want to consider eliminating some of you credit cards. Credit card consolidation offers no real benefit in this case unless you are willing to change your spending habits.

Some people have five or more credit cards with small credit lines. You can consolidate these cards under one major card. By transferring the balances to a card with a higher limit, you will eliminate payments and have less to keep track of. Keep in mind though that all credit cards have high interest rates. Most have high late payment penalties as well as over limit fees. If the reason you are consolidating is to strengthen your credit as opposed to reducing the number of payments, you probably want to go with a personal loan. Remember, once you’ve cleared the balances on the cards, you need to eliminate some of them or you will just need to repeat the process again in a couple of years.

Credit card reduction involves a lot of honesty, both with yourself and your creditors, and negotiation. It isn’t simply a matter of what you owe, or what you can afford to pay. Reduction is the process of reducing your credit card debt to a manageable level. Primarily what credit card reducing agencies do is to negotiate a lower payment with your creditors in exchange for freezing your account. Many require you to agree to refrain from incurring debt for the life of your commitment with them.

This isn’t a bad way to reduce your credit card debt but you do need to be careful that the agency you work with is ethical and will follow through on their end of the deal. One of the biggest frauds around right now is someone promising to get your credit card payments reduced and then walking away with your money.

Credit card reduction services do cause a negative impact on your credit score. If you are getting collection calls for late payments and don’t expect the situation to improve in the near future, though, it is an option worth considering. The black mark from debt reduction will be less severe than declaring bankruptcy and it will not stay with you as long as a bankruptcy will.

There is a benefit to both sides of the issue. For the debtor, the benefits include smaller payments, an end to harassing phone calls and dunning letters, and the goodwill of the creditor. There are agencies and attorneys who specialize in these negotiations, and there are internet sites dedicated to offering advice for do-it-yourself arbitration. No matter what path you choose there are a few things you need to consider before you begin.

First, no creditor will negotiate with you as long as they are still receiving the minimum payment due. They have to believe there is a real possibility of you declaring bankruptcy before they will agree to talk. They will acquire a current credit report before they talk to you. If they feel, you are being less than honest with them about your situation they will continue to try to collect the debt and may even sue you for their funds. Remember, honesty with your creditors will garner more favor than drama. You probably won’t have your debt forgiven, but they consider negotiation to be in their best interest.

Second, credit card debt settlement does not protect you from litigation by a creditor. Declaring that your circumstances have forced you to propose negotiation does not compel a creditor to agree to it. Only a court order can do that and you have to declare and prove bankruptcy to acquire that order.

Almost all creditors will agree to negotiate reduced payments, stop future finance charges, and lower your interest rate. They would rather get a portion of their money back than none at all. This makes credit card debt settlement a viable option.

How negative will the impact be to your credit score? That depends on the total amount of your debt and how many creditors it involves. You must have at least two thousand dollars of accumulated credit card debt even to attempt a settlement. Obviously, if you need to settle with a dozen or more creditors the impact on your credit score will be more severe than if you are dealing with only a couple of them.

Most agencies will require that you contract to remain debt free while you work them. They will tell you from the first; their goal is to help you become debt free, not to clean up your mess so you can make a new one. Many agencies also require that you take credit management courses. There are multiple free courses on line.

Excessive credit card debt is a national epidemic. You are not the only person in this fix. In fact, many credit card debt counselors became counselors as they learned to manage their credit. They will be sympathetic to your problems.

If your credit card company has suggested that you seek credit counseling then you know you are in trouble. Take their advice. Find an accredited agency, preferably one associated with the Better Business Bureau. In fact, your credit card company may recommend one for you. Credit card counseling is the last option before bankruptcy. Filing for bankruptcy is difficult at best. You have to prove every penny of your income and every single debt. Beyond all that, you have to appear in court and your problems become public knowledge at that point.

Once you’ve entered into credit card counseling, your phone will stop ringing and you will have more of your money available to pay your other bills and maybe even put some aside for a rainy day. It will still take years to repair your credit rating but you will have better resources to work with.