Credit cards can be a huge convenience. But if you aren't careful, they are also an easy way to get into serious financial trouble and end up with high debts and bad credit.

The best way to handle credit cards is to spend frugally and pay promptly. But for those people already struggling, the following are some ways to reduce credit card debt, from payoff strategies to debt settlement.

Downsides of Credit Card Debt

There are many good 澳洲幸运5官方🍰开奖结果体彩网:reasons to carry less credit card 🃏debt or even none at all. Among them:

Cost

Credit card interest is much higher than other forms of debt. In fact, card interest, on average, runs about two to three times the interest rate for a 澳洲幸运5官方开奖结果体彩网:home-equity loan or mortgage. It can also take a big bite ou💙t of your mo🍷nthly budget.

Financial advisors generally say the average person shouldn't pay more than 10% of their net take-home pay on credit cards or other 澳洲幸运5官方开奖结果体彩网:consumer debt (not including mortgages), notes Howard S. Dvorkin, a certified public accountant and founder of Consolidated Credit Counseling Services. Spe💞nding more than that might make it harder to make other ends meet.

Risk

Lewis J. Altfest, a 澳洲幸运5官方开奖结果体彩网:certified financial planner in New York whose clients tend to be professionals with large incomes, says credit card debt often represents a ris🎃k. It can also be an early warning sign♉ of trouble ahead. "Too frequently, [financial planners] see abusive use of credit leading to financial difficulties," Altfest writes. "Sometimes people just get in too deep."

Taxes

Unlike some other kinds of debt, credit card interest is not 澳洲幸运5官方开奖结果体彩网:tax-deductible. By contrast, the interest you pay on a home mortgage or student loan typically earns 🌞you a deduction.

Lower Credit Scores

One factor of credit that bureaus use in computing your credit score is called your 澳洲幸运5官方开奖结果体彩网:credit utilization ratio. That's how much money you currently owe as a percentage of all the credit you have available to you. For example, if theꦬ limits on your credit cards total $15,000 and you owe $5,000, your credit utilization ratio is 33%. Generally speaking, a credit utilization ratio greater than 30% is con൩sidered a negative in credit scoring.

How to Attack Credit Card Debt

I🅷f you want to reduce your credit card debt, here are some of the steps you can ta🍎ke.

Pay More than the Minimum

Suppose you owe $5,000 on a credit card and are paying 15% interest. Your credit card company might allow you to make a modest minimum payment, suc๊h as 2% of your balance or $100 monthly. But just making that minimum 🐼payment will result in years of debt and many hundreds of dollars in added interest.

Assuming you make no new purchases on the card and pay that $100 minimum each month, how long will it take to pay off the $5,000 debt? The answer is 79 months, or more than six and a half years. You will also end up paying close to $2,900 in interest. That's a lot of money to pay to borrow $5,000.

Pay Off the Highest Interest Rate First

"Let's say you have four credit card debts," said Charles Hughes, a certified financial planner in Bayshore, N.Y. "Instead of making four equal payments on all of the cards, consider making the biggest payment on the card with the highest interest rate." After you've paid that card off, move on to the one with the next highest rate.

This technique is called the debt avalanche, and it's the most financially efficient choice. 澳洲幸运5官方开奖结果🍌体彩网:It con𝔉trasts with the other payoff strategy, the debt snowball, in which you completely pay off the smallest debt first (paying just minimally on the others). Then you use your extra money to methodically pay off the rest of your debts from smallest to la💖rgest. This gives the psychological benefit of reducing the number of debts you owe through a series of smaller victories until the biggest one is the only one left.

Avoid New Debts

Put your cards away for a while and try to make your daily purchases in cash. This could also be an opportunity to do a cash-flow analysis to figure out where your money has been going, Hughes notes. You will probably spot unnecessary spending that you can cut back on, ꧅and save all the more.

Transfer Your Balances

You may be able to transfer your balances from high-interest cards to lower-interest ones. Such offers often come with a 0% introductory interest rate for six to 12 months. Enticing as that may sound, there are some caveats. For one thing, transfer offers tend to require an up-front fee of 3% to 5% of the amount you're transferring or else a flat 澳洲幸运5官方开奖结果体彩网:balance transfer fee. Even so, it could be worth it, especially if you use one of the best balance transfer cards♏ available.

Consolidate Your Debts

You might also take out a personal loan or 澳洲幸运5官方开奖结果体彩网:line of credit to 澳洲幸运5官方开奖结果体彩网:consolidate your cred💙it card balances (and other debts) at a lower interest rate. With such a strategy you could conceivably convert card debt on which you're paying 15% or more in interest to a loan witꦗh an annual percentage rate more in the range of 4% to 8%.

Just remember to ban🔯k what you save on interest rather than sp🉐ending it to increase your debt, and be sure to compare different personal loans in order to find the best one for you. You may also want to work with a debt relief or settlement company to help you reduce the amount of outstanding debt.

The Bottom Line

Being stuck in credit card debt can be frustrating and the cause of considerable financial stress. There are proven strategies that can help you break free of being in perpetual debt that will save money and improve your credit score. These include always paying more than the minimum payment on outstanding card balances, prioritizing the account with the highest interest rate, transferring balances to lower interest cards and avoiding taking on new debt. Getting unstuck is not always a choice for those with limited incomes but by eliminating unnecessary expenses and focusing on gradually paying down the principal most people can make significant progress over time.