How to Eliminate Credit Card Debt on your Own |
By Charles Park on December 2, 2010
.jpg.aspx?width=75&height=75) In the current economy, you would be hard-pressed not to find advertisements on television offering phone numbers to services that will help eliminate your debt. Considering that these ads are quite costly to run, it would be safe to assume that these services intend to make a profit from credit card debt holders worth the money expended to market them. Fortunately there is a relatively simple system that does not require such services and it can, at the very least, help you pay of your credit card debt sooner with less interest and an improving credit score.
With average interest rates on credit card balances ranging between 10-15%, it is no surprise many may find themselves having difficulties paying off their balances, especially when paying only the minimum payment. Minimum payment is a calculated percentage of your outstanding balance but the percentage is so small that paying off your debt through minimum payments will take years if not decades while incurring other financial charges.
To get started, gather the various card balance(s) you owe and list each in the order of highest interest rate. Add up each balance's respective minimum payment – this figure will be your minimum monthly payment. Review your budget, calculate any extra money available, and use it to pay off the credit card balance that is at the top of your list (the balance with the highest interest rate). Pay the minimum payment for the rest of your balances. By steadily paying off the credit card balance with the highest interest rate, you are minimizing the total amount of interest that needs to be paid. After you pay off the credit card balance at the top of your list, move to the next on the list and repeat.
In the process of paying off each balance, though your minimum payment will decrease, you will be paying a fixed amount every month (initial total minimum payment and extra money from your budget), thus, accelerating the process of paying off your debt by decreasing the principal balance.
To estimate the repayment for each card, consider downloading this simple calculator:
Download Excel File: Calculate Credit Card Payoff
Source:
Vohwinkle, Jeremy. "How to Eliminate Credit Card Debt." About.com: Financial Planning n. pag. Web. 10 Nov 2009. <http://financialplan.about.com/od/creditdebtmanagement/qt/how-to-get-out-of-debt.htm>.
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