Cardholders pay off their credit cards

Earlier this year, Mike and Jodi Lee told themselves there had to be a better way to handle their debt.

Before they found a way out, Mike Lee had resigned himself to being in debt.

"I thought I would have car payments and house payments all my life. But now I see that doesn't have to be the case," he said.

Like the Lees, there are more cardholders paying off their debt this year than in the last eight. According to the Associated Press, credit card debt dropped to its lowest rate in more than eight years.

Bank issued credit cards like MasterCard and Visa dropped from $5,719 to $4,951 in average debt per user, which is about 13 percent less from a year ago, according to the Associated Press.

Despite the national drop to less than 1 percent in delinquencies, Florida was still among the highest with 1.24 percent.

That doesn't mean Floridians are not taking action. The recession has led many to rethink how they spend their money.

"We were careless," said Mike Lee, "If I wanted a new pair of jeans I bought them, even though I didn't need them."

To eliminate their debt, the Lees came up with a budget, stopped using their credit cards and debit cards and made a conscious effort to distinguish what was necessary from what they wanted.

William E. Lewis Jr., credit repair expert with Credit Restoration Consultants and host of "The Credit Report with Bill Lewis" on AM 1470 WWNN, said the drop in credit card debt has to do with people paying down their debt and banks limiting their credit limits.

"They are taking their savings that could be used for a rainy day and paying off their credit," Lewis said.

On the downside, they have less spending money. The upside, Lewis said, is these cardholders are earning more money by paying off their debt.

Since savings and checking accounts don't yield high returns, cardholders who are paying between 18 to 34 percent on their cards earn more by not having to pay the interest.

"They're not making anything on saving accounts," he said.

From February to May, the Lees reduced their debt by thousands of dollars and are helping others do the same through a 13-week course based on financial advisor Dave Ramsey.

The course begins today and is already filled to capacity with 48 people. They plan on offering it again at the beginning of next year.

Mike Lee said many of the participants are tired of living paycheck to paycheck.

"They are tired of not having enough money at the end of the month," he said.