Basics, Credit, Debt Reduction

How To Eliminate Credit Card Debt

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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4 thoughts on “How To Eliminate Credit Card Debt

  1. Thanks for making an easy step-by-step guide. Debt can be overwhelming, and this really helps to break it down.

    Your advice to pay off the smallest balance is very sound. Minimum payments include a lot of extra fees, so eliminating each balance can get rid of money you are paying that doesn’t do much for what you owe. Thanks for a good article!

  2. Here’s an interesting scenario for you to ponder. I’ve spent the last 12 months dealing with a large debt burden from old debts and cards built up over quite a long period of time. I have paid all the charge-offs and are just finishing up paying off the last and now only credit card I plan to keep. As you can imagine the damage to my credit was tremendous and I have a score that is slowly improving but still is in the mid 500’s. Part of the slowness of recovery I’m sure was the high balance I had on on my Visa Card, until now. My plan going forward is to make judicious use of a rewards based credit card and to ALWAYS pay if off in its entirety before the grace period expires each month. However I have heard that carrying a small balance over month to month is actually more useful to rebuild credit. I’m trying to speed my credit recovery process and apply a great many of your tactics, but cannot find a good source of info about credit score recovery and credit cards. Any thoughts?

    FWIW the small carryover balance I was considering was $10 per month or less…

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