A Strategy for Paying Off Your Credit Cards

The average American owes more than $8,500 in credit card debt. When used wisely, credit cards are a useful tool and can help earn a good credit score. However, many consumers find themselves overwhelmed by debt resulting from overspending and making minimum monthly payments. This combination can be extremely damaging to your personal finances. If you’ve found yourself in this situation, it’s time to commit to paying down your credit card balances.

How to start paying off your credit cards

One of the most effective ways to pay off credit card debt is called the “snowball” method. This technique will help you get out of debt in a relatively short time. Here’s how it works:

Start by making a list of all your credit cards. Note each credit card name, balance owed, interest rate, and minimum monthly payment. Then start sending more than the minimum payment each month to the card with the lowest balance. You could also opt to begin by paying down the balance on the card with the highest interest rate — even if the balance is higher. It may take longer to pay down, but you’ll save money in the interest charged to your card. Either method will give you the same result: you’ll pay down your credit card debt.

Continuing the credit card pay down process

After the first card is paid in full, choose a second card (with the lowest balance of the cards that still have balances). Along with the regular payment you send, add the amount you had been sending each month to the first card. Continue this until the second card is paid in full. Then focus on the next card by sending not only its minimum payment, but adding the money you were sending on the first and second cards as well. Keep this up card after card and you’ll be amazed at how fast you can pay off your debt. This method can cut years off your payment schedules and save thousands of dollars in interest.

Paying off your credit card debt is possible; it just takes a little discipline and a good plan. Don’t put it off another day — reclaim your financial freedom.