How to Pay Off Credit Cards & Get Out of Debt


Some people who offer debt management advice advocate paying off the smallest balance first, citing the psychological lift that comes with the knowledge that you have eliminated an entire debt. Paying off the debt with the highest balance first, however, might save you money — especially if it carries a significantly higher interest rate. Regardless of which approach you take, it is the execution of the plan with discipline that will result in a debt-free status.

Things You'll Need

  • All of you account information
  • A spreadsheet
  • Discipline
  • Make a spread sheet with all of your credit card debts, indicating the interest rate of each.

  • Determine how much you can afford to set aside to pay down credit cards each month. For easy math, assume you have $200 to apply toward four credit card balances.

  • Add the minimum payment required for all of them and note the sum. Assume the total is $120.

  • Pay only the minimum on everything except the credit card with the highest interest rate. Take the reminder of your budget and apply it to the card with the highest interest rate

  • Once the card with the highest rate is paid off, use the money you were paying on that card to pay down the card with the next highest rate.

  • Use any unexpected additional cash to reduce your debt.

Tips & Warnings

  • be focused
  • be realistic with your goals

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