Tips for Paying Off Credit Card Debt

Credit cards can be particularly useful in an emergency or for building credit when they are used wisely. Ideally, you want to pay off your balance monthly to avoid interest charges, and you do not want to spend more than 10% of your available credit. If you, however, already have credit card debt, you should develop a plan to pay off the debt. The first step is to stop using the credit cards and only pay with cash or your debit card. The next step is to get organized. Figure out exactly how much you owe on each card and what each card’s interest rate is. Create a budget that allows you to pay the minimum on each card. Then, if you have extra money in your budget, allocate it to pay more than the minimum on the credit card with the highest interest rate. Or you can allocate it to pay extra on the credit card with the lowest debt. That way, you will pay it off faster and be motivated to continue paying down your debt. As you pay off cards, use the money budgeted for those cards to pay extra on your remaining cards. Another way to pay off debt more quickly is to do a balance transfer to a card with a lower interest rate.  Nerd Wallet and Investopedia have articles about how balance transfers work and what to look for in a card to use for a balance transfer. Credit Card Insider offers more information about the different approaches to reducing debt and their pros and cons. It is important to create a plan that works best for you, your situation, and is feasible. If you aren’t able to stick with the plan one month, don’t give up. Keep trying and keep working towards your goal!

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