Cut Credit Card Debt in 11 Steps

NEW YORK (TheStreet) — One positive outcome from the economic downturn of the past two years is that consumers are paying down their credit card debt.

In November, Equifax reported that credit card debt had declined 7.3% from a year ago. The latest Federal Reserve Consumer Credit report said credit card debt fell in November for the 14th consecutive month. Revolving credit, the majority of which is credit card debt, has fallen more than $100 billion to $874 billion from $976.1 billion in October 2008.

A number of factors could be contributing to this trend. Millions of consumers have lost their jobs or experienced a significant decline in income. There also seems to be widespread consumer outrage with the changes made by credit card issuers. Last year was filled with interest rate increases, credit limit decreases and tightened credit by issuers. These were strong incentives for cardholders to cut back on their credit card usage and pay down their balances.

Even though the Credit Card Accountability, Responsibility and Disclosure (CARD) Act will help stabilize some rate increases, many cardholders are already stuck with high rates. The best way to protect yourself against these high rates is to pay off your balance. If you are unable to pay off that balance quickly, shop for the best credit card with the lowest annual percentage rate, or APR.

Here are 11 tips to help you cut your credit card debt:

1. Accept that paying off debt won't be easy. It took you a while to get into debt, and it will probably take you longer to get out. Don't get discouraged.

2. Find out how much you owe. Collect your bills for outstanding debts, including those for credit cards, mortgages, student loans, car loans and bank loans. Create a summary sheet that lists the creditor, monthly payment, balance, interest rate and credit limit for each. List the status of each account, if any bills are past due, and verify the payment due dates.

3. Prioritize your bills. If money is short and you can't pay all of your monthly bills, first pay the bills that are necessary for health, shelter, groceries and basic transportation. Then pay secured loans, such as your car loan. Payments on unsecured loans, such as credit cards, should come last in dire situations.

4. Contact your creditors to negotiate lower rates. The less money you pay in interest, the more money you have to pay off your bills. You may also want to shop around for a mortgage or credit card with a lower rate. If you're in danger of missing a payment, contact your creditors immediately. They may be able to help you work out a payment plan, lower your rate or reduce your monthly payment. Credit card loan defaults are 10% or more for some issuers, so many are willing to strike a deal to get balances paid.