Over the past few years credit card debt has been a problematic issue in this country. That’s why eliminating credit card debt is so big these days. While not everybody has a credit card those that do usually always carry a balance. To add insult to injury the interest rate on those credit cards generally run between 10-30% APR.
These high interest rates make it tough for folks to pay off their debt, particularly if their only making the minimum monthly payment. Basically, just making minimum payments can make even the tiniest balance stretch over 10 years to pay off and thousands of greenbacks in finance fees. And you wonder why people think becoming debt free appears so hard.
If you follow the steps below and put a plan in place, you will repay your debt much earlier than anticipated, and ultimately enhance your credit score in the process.
- First thing is that you need to write all your credit card information on sheet of paper. You’ll want to include all your current outstanding balance, interest rate, and your current minimum payment. All this information can be found on your monthly statements.
- Add up all your minimum payments.
- After gathering all you credit information you should sort all your credit cards in descending order(highest interest rates first).
- Pay a little bit more than the total monthly minimum payment. You have to pay more than the total monthly minimum payment so you can repay your debts much faster and become debt free.
- Take a look at your current budget and see how much extra you can spare each month in addition to the minimum payment. Don’t worry if you only giving a little extra towards your balance, the key here is every penny will help you get out of debt.
- Take those extra payments and charge them towards the credit card with the highest interest rate. So whatever additional money you budgeted or save for should be place on that card.
- Continue this debt elimination process until the first card is paid off. When the 1st card in your portfolio is paid off, continue with the minimum payments on the other cards. However, take the amount you were paying on the first card, and add towards the 2nd highest interest rate on your credit card.
- Last but not least, repeat this process until all you credit cards are eliminated, and you are debt free.
Related posts: