Credit card debt has been a growing problem for many Americans who are less than spend-thrifty. With credit card usage comes a false sense of security that often leads to credit card debt when you least expect it. If credit card debt is already a problem for you and your family, you can take steps to reduce it by following some sound advice.

Financial advisor Dave Ramsey explains credit card usage like this: There is no upside to using a credit card because the “freedom” of the card helps you rack up debt that much faster.

Using Credit Card Debt Vs. Cash

creditcarddebt Credit Card Debt: Recognizing Irresponsible Credit Card Usage

Credit Card Debt

Think of it this way. If you had to shell out $400 in cash out of your wallet to pay for that new Louis Vuitton purse and Dolce & Gabbana sunglasses, would you fork it over to the cashier as freely as you hand over your credit card? Think about counting out all of that money. Assuming you paid using only $20 bills, that’s a total of 20 bills altogether!

Now compare the effect that this circumstance has on your mind to that of a credit card, which leads to credit card debt. With a credit card, you don’t really have to think about the sacrificed funds as money out “right now.” You can delay the payment for at least a month. Some delay that payment for several months, during which time they keep spending themselves straight into spiraling credit card debt.

What follows are several truths and tips about credit card debt. Realizing that these credit card debt problems exist in the lives of many Americans will help you understand just how widespread the problem is and how wise you would be to take action against getting yourself into overwhelming credit card debt.

  1. Credit cards really do prompt you to spend more money. Unless you have to think of all of your purchases as “money out now,” you won’t feel the rush of the breeze as dollar bills fly out of your bank account. Just one little plastic card gives you the warped sense of freedom and security that is so hard to guard against. But it’s your responsibility to realize this factor in credit card usage, and it is thus your responsibility to spend money just as wisely as you would if you were to pay cash for all your purchases.
  2. Multiple credit cards compound credit card debt. It’s bad enough to rack up a few thousand dollars of credit card debt on just one card. But it’s practically unfathomable once you start burying yourself in debt with multiple credit cards. It’s unfortunate that not all vendors take all types of credit cards and thus “force” you to sign up for cards from different companies. However, if you cannot responsibly handle even just one card, you have no business getting cards from every company under the sun just to avoid carrying cash or being financially responsible.
  3. It’s not just the credit card debt balance that kills your finances. It’s the interest on that credit card debt balance that will really eat into your savings. The whole reason credit card companies make it so easy to spend money is because they hope that you delay payment. This allows them to charge sky-high interest rates on your balance, which makes your credit card debt that much harder to pay off.

Let’s take a look at some numbers for credit card debt interest. Assuming you’ve racked up $5,000 in debt (a relatively small amount, given the national average and spending rates of most Americans), let’s say your credit card company charges 20% annual interest on that balance. 20% of $5,000 is $1,000. That’s $1,000 per year extra on top of your outstanding credit card debt!

 Technically, you’re supposed to make payments on that credit card debt interest every month. Some people take the “easy” way out and only make the minimum payment per month. However, this only prolongs their debt and keeps them under their debt burdens longer.

Ways to Start Getting Rid of Credit Card Debt

So how should you go about getting rid of this credit card debt? Let’s take a look at some options.

  1. Cut out “vice” and entertainment spending. Do you drink beer with your buddies every Saturday night? Do you go shopping with the gals every Sunday afternoon? These activities do more than just nibble away at your finances. Every dollar you spend on needless items is one dollar that you could have put toward digging yourself out of credit card debt.
  2. Save money instead of spending it. Money doesn’t burn a hole in your pocket; it’s your mind that allows you to think it does. So put it in your bank account, not your wallet, and leave it there. Allocate that money to paying off existing credit card debt and interest.
  3. Try to get a second job. Encourage your spouse to get a job, or try to find a second job yourself. Any way you can make more money will help you pay off credit card debt and help your family survive in the meantime.