With the looming financial threats of job loss, income reduction, and a recession, it makes sense that most people have made credit card debt reduction a priority. And it should very well be a priority. After all, this type of debt normally carries the largest costs in terms of interest rates. As well, given the rising rates, credit card debt reduction is one thing we all need to look at more closely if we want to not only weather this economic storm, but to make ourselves financially better off.

In terms of interest rates, the trend has been that they are rising. Considering that back in May 2009 the average card rate was 13.94% and today is a full 1% higher, credit card debt reduction is something that can easily curtail the amount of money we spend on our debt.

Rising rates are not the only reason people should concern themselves with credit card debt repayment. Let’s look at credit scores. With revolving credit, people are more apt to see their scores tank because more than 65% of their FICO score is based on two major factors: utilization and repayment history.

Borrowers who do not make credit card debt reduction a priority will normally encounter problems when there is a personal financial setback, such as a reduction in income. When the balance hovers at or near (or even above) the card limit, borrowers will be penalized through their score for having high utilization. To compound matters, if the financial setback is a bad enough and a single minimum payment is missed, the score will suffer even more on account of late payments.

Negative scenarios like these are never fun to explore. Still, we need to hedge ourselves against the three negative economic facts that are going on right now. Again, they are: card rates are increasing; the economy is tough right now and the end point has not been clearly set and; credit scores are more and more important to the lenders we want get credit from. Without question, we need to put a plan for credit card debt reduction in place sooner rather than later.

It is amazing to hear some of the different reasons people have for carrying a certain amount of debt. And there are as many different reasons as there are to make-money-quick schemes. However, we all share one universal care when it comes to financial well-being and that is how to achieve it. Credit card debt reduction is one such way. And with things the way they are now, it makes much more sense to tackle such debt now before it is too late.

There are times when just meeting your financial needs will leave you with a tremendous amount of debt. When it comes to repaying debt and properly managing your finances, you have plenty of options available to you. The best way to repay debt involves focusing almost exclusively on higher-rate debt and gradually working your way to lower-rate debts. Keep in mind that all debt need to be paid, but keeping the lower-rate debt to the minimum amount and channeling remaining funds to the higher-rate debts will help you get out of debt quicker.

Start by listing all of your debts, including creditor name, amounts, interest rate, and the minimum amount due. It works best when you list them in descending order, starting with the higher rate debt first, and ending with the lowest-rate debt. This way, you know at a glance just how much you need to pay to each creditor and which should be your primary, secondary, etc., focus.

With the completed list before you, determine how much you need to repay to all of your debt on a monthly basis. This means adding up the “monthly minimum due” column. Balance this amount against the funds you have available each month to pay toward your debt. Hopefully, you still have money left over. This amount should then be allocated to the top creditor (i.e. the one that charges you the highest rate). It makes no sense to spread out this extra amount - direct this extra money to your top priority.

An essential element to successful financial planning includes establishing a savings account. When you have debt, however, savings should be moderate with the primary focus being repaying that debt. However, savings of even $10 per paycheck will accumulate rather quickly if left untouched, and this is extremely helpful when it comes to making a lump-sum payment against your debt. Alternately, you can discipline yourself to spend only what you have saved in this modest savings account when you have an urge to splurge.

One option that you should not dismiss is borrowing from friends and, more likely, family to repay higher-rate debt. Typically, family will not charge 19% interest on the money they lend. In fact, they often lend at zero-interest, which means that you will be far more effective in repaying family than you are in repaying credit debt. If your family has the means to lend the money, consider it carefully in order to get ahead financially.

If you have large amounts due, your progress will be much slower. Keep this mind when tackling such amounts as it can get discouraging after a few months of seeing little progress. Once you start clearing your debt, you will start seeing improvements to your personal finances almost immediately and, within months, even your credit score.