…and do it NOW!!!

This is typically the highest-interest debt that people obtain, and maintain.  With many Americans owing over $10,000 to credit card companies, it is an epidemic.

How do I kill credit card debt?

  1. Get all your cards in order, write down the balance (how much you owe) APR (the interest rate) and how much the minimum payment is (from your most recent bill) on a single sheet of paper.
  2. Add up the minimum balances.  This total represents your minimum debt payment for the month, put it into your budget.
  3. Cut as many expenses as possible out of your life, simple things like one less coffee a week, or going a month without dining out can give you a cushion that you didn’t even know you had.  Now would be a great time to give up drinking, smoking, or gambling too.
  4. Take the money you save each month and add it to the minimum payment of the card with the highest interest rate (if you can pay another one off with this extra amount, do that first it will be simpler).
  5. When that card is paid off, take the extra monthly money plus the minimum for that card and add it to the minimum of the next highest rate credit card.  Continue until all the cards are paid off.

Don’t sabotage the process.

  • Avoid spending on the cards as much as possible, consider them for dire emergencies only.  Freeze your card in the freezer if you have to.
  • Don’t use the card
  • Don’t buy anything with the card
  • Remember to avoid using the card even for minor purchases
  • Insert your own way of saying don’t use the card here

What about my credit score?

You’ve ran up your credit cards which means you have all kinds of things showing up on your credit score, now you’re working on improving your score in two ways.  First, you are making more available credit to debt.  This will impact your score significantly.  Second, you are creating a history of on-time payments, and every month you have of a perfect payment history, the better your credit becomes.

Am I prepared for a credit card?

Some people can’t handle credit cards, and the sooner they admit this, the sooner the cards are destroyed and the better situation they’re in financially.  I know some people who actually ask their bank not to give them a debit card because they’ll use it like a credit card and drain their checking account.

What have been your experiences with credit cards? I want to hear them.