1. Create a list of your credit cards.
- Include account balances, interest rates, due dates, and minimum monthly payments.
2. Make minimum payments to all credit cards, on time.
3. Make an additional payment to one of the cards on your list.
- If you make an extra payment to the account with the smallest balance, you can quickly eliminate an entire card balance from your plan. This may provide a much-needed emotional boost and keep you motivated.
- If you make an extra payment to the account with the highest interest rate, you guarantee that you will be paying the least possible amount of interest. This is a mathematically-sound approach.
4. Continue to make minimum payments and the extra payment until the first card on your list is paid off.
- If you have the chance, make additional extra payments – micro-payments – throughout the month. This reduces your average daily balance and really speeds up the debt reduction process.
5. Continue to make minimum payments to the other cards, and take the additional amount you were paying on the first card plus the minimum you were sending to the first card, and apply that total to the second card on our list.
6. Repeat this process of eliminating balances until all credit card debt has been eliminated.
This debt reduction process works with any types of debt and is especially effective when dealing with credit card debt.
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