A Two Card Approach to Credit Card Debt

A few years back, as we all know, various forms of American economic overindulgence came to a head and almost caused a collapse of the country’s economy. The Great Recession, as it is being called, was an economic squeeze caused by overestimated property values and a country wide epidemic of revolving credit card debt.

The mess forced several of the nation’s titan financial institutions to close shop and according to the Mortgage Bankers Association led to over 1.2 million (and counting) home foreclosures, mostly across and California. Even though the recession is now shrinking smaller and smaller in the rearview mirror its effects can still be felt.

For Americans who have credit card debt the average amount of credit card debt per household is almost $15,000, totaling a staggering $2.4 trillion in consumer debt across the country.

It was thought that perhaps the recession had taught the many Americans who live beyond their means a lesson, as many started tightening their budgets and the national consumer debt began to shrink. However, now that the tension is easing, it seems that Americans are going back to their old habits as January marked the first month of last 27 where consumer debt increased.

Obviously lacking in self-restraint Americans need a plan to systematically lower – and hopefully eventually eliminate – their credit card debt. Though traditionally having multiple credit cards is considered a bad move for someone in debt, having two credit cards: one strictly for everyday purchasing and one specifically for the debt, may be just the trick to help you track and minimize your expenses and work down your debt.

With one card it is hard to track exactly how much you’re spending per month, and the interest you pay monthly for not paying the card off will be higher than if you were only paying interest on the debt.

Therefore with, one card strictly for your monthly expenses you can see exactly what you’re buying each month and look for ways to cut down. You can pay this low amount off each month and not have to pay interest on it.

The other card specifically for the debt you will have to pay the interest, but at least it is as small as possible. You can also take the extra money you save from tightening your budget and use it to slowly pay off your credit card debt.

This plan isn’t a magical cure to debt problems, it will still take budgeting and sacrifice, but hopefully by being able to see exactly your monthly expenses and debt you can start making changes to get back into the green.

If you’re piling up debt and feel bankruptcy creeping closer, debt consolidation may end up being your best solution. Before you try a consolidated loan, give budgeting and planning an honest shot.