Pay Off Credit Cards First

Credit Card debt often has the highest interest percentage and what makes it even harder to pay off is the monthly minimum payment. This payment is often very low which allows a person to become lazy in paying the debt off. What finally made my wife and I buckle down and start paying off our credit cards is when we looked and realized that the interest every month was more than we were paying every month. In other words, we were going more and more in debt every month even though we were paying on it every month. Here are the steps we took to pay off our credit card debt.

Find that extra money:
Look at your monthly expenses and start making a list of things you are spending money on that can be cut out. Whether it's the daily newspaper, eating out, coffee every morning or all of the above, it adds up fast. You should be able to find at least $50 to $100 extra a month that you can start applying to your debt.

Take it one at a time:
If you have more then one credit card that you are only paying the minimum on, start taking that extra money you have every month and applying it, on top of the minimum payment, to one card. Pick the card that is doing the most damage every month between the balance and the interest rate. The goal is to get the one that is hurting you the most paid off as quickly as possible. Once you have the first one paid off, apply all of that money to the second credit card on the list.

For instance, if you have a minimum payment of $50 a month on a credit card, add together the extra $100 and the minimum payment and pay $150 a month. Do this until the first card is paid off and then move to the second credit card. If this card has a minimum of $40, add that to the $150 you were paying on the first card. This way you will be paying $190 a month on the second credit card. Keep doing this until you have paid them all off.

Balance transfer with caution:
One thing that helped my wife and I stay off those interest charges until we could pay off our credit card was by doing a balance transfer to a card that had 0% interest for six months.

You have to be careful and read all of the fine print. One of the biggest problems is if you do not pay off the full amount within the set amount of no interest time, the interest will be applied from the first day you did the balance transfer. So only take this option if you are sure that it can be paid off in the given time of no interest.

If you use these steps, your credit card debt will quickly begin to shrink and you will get out from under the most expensive debt there is.

Posted by Tim on May 02, 2005 | 0 Comments

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