4 Quick Tips on How to Pay Off Credit Card Debt

Want to take back control of your financial life? Perhaps you’ll be in the market for a big ticket item, such as a home, a car, or even a well-deserved vacation? Certainly, an answer of “yes” to either question deserves a well-rounded solution. Well…here goes: Many consumers underestimate the powers of a zero debt load. “Up with hope, down with debt,” they all yell out. In this same vein, high balances on credit cards carry with it an entire slew of caveats, including higher finance charges, hidden fees, higher credit utilization ratios, lower FICO scores, etc. Credit lesson number one: the longer you keep your balances lingering, the longer your balances keeps you from achieving your financial goals. The following four tips should help get you on your way to a life free of burdensome credit card debt:

Tip #1 Getting Organized…

By in large, getting organized entails gathering up all your credit card information, and doing a little homework, such as making note of your balances, interest rates, due dates, etc. For the most part, you’re trying to access the situation at hand. Do you have several balances spread out over a number of different cards? On the other hand, is it a situation where you have one big balance on one card with several smaller balances spread out on a number of different cards? Have you been playing the balance transfer game? Perhaps you’ve considered consolidating your debts to just one card, but can’t seem to make any headway on your balances? If getting organized does anything, it most certainly will allow you to answer some very tough questions about your personal finances up that particular point.

Tip #2 Paying Just the Bare Minimums…

Your next logical course of action is pretty straightforward: add up the minimum payments on each of your credit cards. After getting a total on bare minimums, make a record of this number—as this is the minimum number you’ll need to stay current on your credit card bills without doing major damage to your FICO scores. Late payments hurt scores. And they hurt even more to those consumers with very high FICO scores, including those in the high 700s and 800s. Alas, debt can pile up for many different kinds of reasons. As the saying goes, “troubles easy to get into but hard to get out of.” The same applies to credit card debt; nevertheless, paying down your debt is pretty straightforward if you follow a proven strategy.

Total Cost When Paying Only The Minimum Payment

(click column header to sort results)
CARD  
INTEREST RATE  
MINIMUM % PAYMENT  
MINIMUM PAYMENT  
TOTAL INTEREST COST  
YEARS TO PAYOFF  
CARD A
19.8%
2%
$40
$7636
42
CARD B
19.8%
2.78%
$56
$2585
17
CARD C
12.5%
2%
$40
$1840
18
CARD D
8.25%
3%
$60
$542
10

Tip #3 Paying Down The Card With The Highest APR…

There are many proven strategies for paying down debt. The most proven technique, however, has largely been one for which entails getting rid of the debt that’s attached to the highest interest rate. Makes sense right? After all, from a dollar and cents frame of mind, what you essentially end up doing is removing your highest debt burden. It works like this: you increase your payment on the credit card with highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards. As a kind of a snowball effect, once you remove the highest debt load, this opens up a greater portion of your income to be used towards your remaining debt obligations, and so on and so forth. Remember: your goal is to have a zero balance on all your credit cards.

Tip #4 Consolidating Your Debt to a Single Card or Loan…

The last and final strategy for paying off your credit card debt is actually the most efficient. By and large, whenever you consolidate your credit card debt into one single payment—be it a single credit card or debt consolidation loan—you effectively end up eliminating the risk associated with paying excessive finance charges. Worried about late payments? Not any longer: under a debt consolidation, you now only have a single payment to make each month, eliminating the risk of late payments associated with having several reoccurring credit card payments each month. Moreover, for extra added security of late payments, you could even select to use automated payments. This way you never have to worry about making late payments. In addition, you should make it a habit of paying more than the minimum amount each month, which will your progress towards paying off your debt burdens.

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2 comments

MarloByDesign profile image

MarloByDesign 21 months ago from United States

I think it is great that you wrote a Hub to help people pay off credit card debt, but I am sad when people I know spend their money frivolously and do not want my advise to help them get out of debt. Rated 'Up'.


j80caldwell profile image

j80caldwell 21 months ago Author

Great, Thanks!

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