10 Steps To Pay Off Credit Card Debt

credit-cards-2Credit card debt usually accumulates over a long period, one purchase at a time. Soon you find yourself owing more than you thought you ever would and you’re paying 18% interest on debt you know  you shouldn’t have.

Now it’s time to eliminate your credit card debt. Here’s how you do it.

  1. First, set some goals to determine what you want to accomplish. Do you want to pay off your debt faster? Do you want to improve your monthly cash flow?
  2. Next, make a list of all of your credit card debts, including the interest you pay on each card.
  3. Keep one or two credit cards for emergency use, such as renting a car or a hotel room. Cut up all the rest.
  4. Pay with cash or debit card for everything you need. You can’t reduce the balances on your credit cards if you keep spending money on them each month.
  5. Make a personal budget to determine how much you can afford to devote to paying down your credit cards each month.
  6. If possible, transfer balances from your highest interest rate cards to your lowest interest rate cards to reduce the interest you pay. Read the fine print, make sure there are no transfer fees that would be more than the savings from a lower interest rate.
  7. Pay off your highest interest rate card first. The higher the interest rate, the more you have to pay in interest costs. (There is another alternative called the Debt Snowball Method which, although not as good financially, can still be a good credit card repayment strategy for some).
  8. Make the minimum payment on all your other cards each month. Once your highest rate card is paid off, move down the list one at a time until they are all paid off.
  9. Talk to your credit card companies. See if they will reduce your rate or waive any late payment fees.
  10. Get help. If your credit card debt is more than you can repay on your own, talk to an advisor about how you can negotiate a repayment plan with your creditors.

Good luck, and remember: the best credit card has a zero balance! Once you eliminate credit card debt, managing your financial affairs will probably not be much of a headache anymore, and you will be a step closer to good credit management.

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