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Strategies For Paying Off Credit Card Debt

If you are burdened with excessive credit card debt then you have probably experienced feelings of frustration due to balances that never seem to go down. Take heart, reaching debt freedom is possible although it will not happen overnight. It will take time and self-discipline. The first step is to devise an effective strategy for paying off your balances.

Credit Cards

Create A Realistic Budget

The first step that needs to be undertaken when beginning a debt reduction strategy requires a thorough review of your budget, says the Fifth Third expert. You will need to gather up all of your financial information to evaluate where your money is going. Then you will need to decide where you can cut back on spending. This may mean cutting down on dining out or other entertainment expenses or trips to the mall so be prepared for some changes in your lifestyle. After all, this is probably how you ended up with your credit card balances where they are in the first place!

Setting Your Goals

To help you on your journey to debt freedom it is best to set a goal detailing the date you expect to get there. This will help you to stay focused on your strategy and to resist the urge to use your credit cards. You should also reward yourself along the way. When you reach a certain percentage of debt paid off, reward yourself with a small treat. This will highlight the progress you are making.

Realign Your Payments

Once you have determined where spending cuts can be made, you will need to reallocate those funds toward paying down your credit card balances. It is advisable to pay the most to the cards with the highest interest rates, not necessarily the largest balance and if possible try to double or triple your payments to them. This will save you a considerable amount in interest charges and will give you the satisfaction of seeing the balances decrease much faster.

If you are unable to double your payments, pay as much as possible over the minimum payment. As an example, by making only the minimum payment, with an interest rate of 18% or higher it can take 20 years or more to pay off a balance of $10,000 and you will end paying much more than the original amount you spent. You are basically paying only the interest with a very small amount going toward the actual balance.

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Consolidate Balances

Another option you might want to consider is consolidating all of your credit card balances onto the account with the lowest interest rate. This will reduce the number of credit card payments you make to just one per month and lower your interest rate in the bargain. Call their customer service department and ask them what type of rates they are willing to offer you on a balance transfer and let them know that you want to consolidate all of your balances. This way they may also be willing to increase your credit line if necessary to cover the total.

Typically you should not carry a balance of more than 30% of your credit line on any of your accounts although in this case it might be worth the hit on your credit score while you are paying off the balance. Keep in mind that before proceeding you will want to confirm that the interest rate will remain lower than what you are currently paying for the duration of time that it takes you to pay the balance in full, provided that you have no late payments. Be sure that you get the terms in writing!

Although you may come up with some variations of the above strategies the important thing is to set your goals and stick to them! It may seem like you will never see light at the end of the tunnel but with self discipline and keeping your eye on your goal you will achieve debt freedom.

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Cascia Talbert

Cascia Talbert is a devout Catholic, mother of five children, health and fitness enthusiast and positive parenting supporter. She is also the founder of the award winning online health, fitness, parenting and Christian faith magazine for moms, the Healthy Moms Magazine. She lives in the Chicago suburbs with her husband, five children and one spoiled cat. Her hobbies include gardening, country music, running, and playing her flute. Check out her first book, "Taking Care of your Family's Health and Well-being, Saints to Turn to and the Catholic Faith," available anywhere books are sold.


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