How Do I Get Out of Debt?

Cut up your credit cards so that you're not tempted to spend more. Notify your credit card companies in writing that you are closing the account. Tell the company that gave you the card to have the record reflect that the card was "closed by the consumer"—otherwise, a creditor might think the credit card company shut down the account.

If you keep one credit card for emergencies, try to pay balances in full when your statement comes in. Navy Federal credit cards offer you a 25-day grace period on purchases, so you aren't paying interest during that time.

Contact your creditors immediately if you're unable to pay their bills on time. Explain why you're having problems and that you're trying to be responsive to all your creditors—they may agree to a special repayment program.

Offer to pay only the interest on your outstanding balance each month until you get back on your feet, so they won't lose any money. If they agree, provide them with a follow-up letter outlining what you discussed and ask them to confirm the agreement by returning a signed copy of the letter.

Target accounts to pay off. You're better off going after those accounts with the highest interest rates, but you may boost your enthusiasm for getting out of debt if you knock of several smaller balances first. Visit navyfederal.org/calcs/index.html under "Credit & Debt Management" to find a calculator to help. What's the best way to pay off my credit cards? is a calculator that shows you how to roll-down your credit card debt by paying off your highest interest rate first.

By consolidating your debt at the lowest interest rate you can qualify for. Ask a relative or friend to cosign a credit application if you can't get credit in your own name. Then make consistent, on-time payments to re-establish a good credit history. Visit navyfederal.org/calcs/index.html under "Credit & Debt Management" to find a calculator to help. Should I consolidate my debt? can help you see what your monthly payments might be with a different interest rate and term.