Some experts will recommend you that the best way to pay off credit card debt is to make a list of your credit cards with the highest interest rates cards first. Then, for the card at the top of the list, pay off as much as possible each month instead of making the minimum payment.
Once you have paid off that card, move on to the next highest interest rate card and follow the same procedure. This is what so-called the “debt avalanche” method.
Of course, if you choose to pay off credit cards with smaller balances using the “debt snowball” method, that’s fine too. But those high interest rate credit cards can keep you in debt for years and years.
Interest Charges and Sources of Funds to Pay Off Credit Card Debt
According to Bankrate, “Paying just the $60 minimum payment on a $3,000 credit card balance would take eight years to pay off and cost a person a whopping $2,780 in interest. By paying an extra $50 a month, the debt would be paid off in three years and they would be spared $1,800 in interest charges.”
In today’s economy, this may seem a daunting task. However, considering that the unemployment rate is rising and not only banks but corporations are facing major financial problems, it is important to have the least amount of debt possible.
Money Saving Ideas to Pay Off Credit Card Debt
To save money to pay off credit card debt, Bankrate advises that you follow these recommendations:
* Brown bag ten lunches per month
* Have movies and popcorn at home instead of going out
* Use coupons for groceries and buy store brands
* Make pizza at home instead of ordering out
* Buy in bulk and freeze dinner entrees
* Give handmade cards and gifts
* Shop at consignment, thrift and discount stores”
There are other measures you can take to increase the amount of money you save each month, including:
* Becoming more energy-efficient
* Bundle the cable, phone, and internet
* Call credit card companies to have interest rates lowered
* Eliminate magazine and newspaper subscriptions
* Eliminate unneeded telephone services
* Increase insurance coverage
Anything you can do to begin to pay off credit card debt will only serve to help you in the coming months and years. Most economists assert that the economy will only get worse before it gets better. It is your responsibility to prepare for any eventuality, including setting aside money for any emergency.