Although credit card debt can seem like it will never go away, the good news is that it can decrease with diligence and discipline. The goal is to pay your debt off as quickly as possible which can be done with a plan. This article will go over some tactics to help you pay off your credit card debt quickly.
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If you have one or multiple credit cards that you are not paying off in full every month, you probably find yourself drowning in credit card debt that is getting nowhere. You may have found an online credit card with an introductory low interest rate that has now significantly increased and is making it difficult to pay off.
What should my first step be in regards to paying off credit card debt?
Your very first step should be to stop getting further into debt. This means you should stop using your credit cards. Cut up the majority of your cards and keep only one for emergencies. This emergency credit card should not be carried in your purse or wallet; it should be kept at home so you are not tempted to use it.
What else can I do to pay off my credit card debt?
Another thing you should do right away is to get in touch with each of your credit card companies and ask to have your interest rate lowered. To help your case, tell them that you are considering transferring the balance to a credit card that has a lower interest rate. Credit companies know that it is easier to keep the customers they have rather than get new ones so they will often lower your interest rate to keep you as a client.
The next thing is to put together a budget of everything you spend money on in a month.
How will a budget help me pay off my credit card fast?
The main goal of keeping track of your expenses is to see what you spend money on and what you can give up. After you analyze your spending habits, go through and mark off what are not necessities. This may be dining out, daily coffee or lunch, movies, or clothes.
The more extras you can stop spending money on, the faster you will be able to pay off your credit card. Add up the amount of money you spend on extras and vow to put that money, instead, towards your credit card debt.
For more advice on budgeting and using your money wisely, go to the Smart Money site.
How should I distribute this extra money towards my credit card bills?
After you determine how much extra money, you can allocate towards your credit card debt each month, look at your credit cards, and make a chart. You should list the credit card with the highest interest rate first and then the rest of the cards in descending interest.
Your first priority is to pay off the credit card with the highest interest. For the other credit cards, pay just the minimum each month. For the credit card at the top of the list, pay the minimum plus the extra monthly amount you determined. Do this every month until the first credit card is paid off.
Cross that card off your list and focus on the next one down. This time, pay the minimum plus the dollar amount that you were paying for the first credit card. Keep doing this all the way down your list until all of the credit cards are paid off. You will find that number one, you are spending the same amount of money each month, and that secondly, your credit card balances go down quicker as you go down the list.
Need more ideas? Suze Orman also offers some great advice on how to pay off your credit card debt.
How will my credit card debt be affected if I have an unexpected expense one month?
The nice thing about this payoff plan is that it is flexible if need be. For the most part, you want to do everything in your power to stick with the plan to pay off your credit card debt. However, if there is an unexpected expense one month, you can use some of the extra money you are paying to the credit card company to pay for the expense.
This will set you back a little but if you jump back on the plan right away the next month, you will still be on the right track to pay your debt off quickly.