How to Pay Down Credit Card Debt

How to pay down credit card debt effectively.

Difficulty: Easy

Instructions

Things You'll Need:

• Paper
• Pencil
• Calculator
• Credit Card Statements

1. Paying down credit card debt can be much easier and more efficient if you have a plan. The first step towards paying down credit card debt is to write down how much money is owed to each individual credit card company. Also, make a note of the credit card interest rate beside of each total.

2. Determine how much money can be used monthly towards paying down the credit card debt. Determine this amount by subtracting fixed expenses from your total monthly income. This amount is the money left over each month after necessary expenses have been paid.

3. Once you have determined an amount that can be used monthly to pay down the debt, decide how much money will be applied to each individual credit card. A good rule of thumb is to pay the most money each month towards the credit card with the highest interest rate. Try to pay twice the minimum due on each card. If there are cards with small balances, you may wish to pay them off first. This can be very effective because it gives immediate results and can greatly boost the motivation to stay focused on paying down the debt.

4. Once you have created your plan, it is very important to stay motivated to stick to it. Setting financial goals can be helpful. Once the credit card debt it paid down, decide which credit card(s) to keep and which accounts to close.

Tips & Warnings

• Keep in mind that older credit card accounts help build credit history. When deciding which credit card accounts to close, it is better to close accounts that were opened more recently.
• It may also be helpful to simply cut up the credit cards, rather than to close all of the accounts. Having open credit lines can help raise your credit score.