How to Save Yourself from the Spiraling Effects of Credit Card Debt Credit Card Debt Elimination and Credit Card Debt Reduction Credit card debt is becoming a problem of mass proportions in North America. People are spending more than they earn and using their credit cards to pay for everything from furniture to food. Although it is easy enough to use a credit card for your purchases, the debt you incur can be very difficult to handle. There are, however, ways to take control of your credit card debt regardless of how much you owe. Your financial health can be protected, but first, you need to commit to a sound credit card debt elimination process that works. To begin the process of credit card debt elimination, you need to compile a list of all your credit cards. Start by writing down each credit card including the balance, interest rate and the minimum payment percentage each month, which is generally 2 percent of your total balance. Next, look at your last statement and note the minimum payment. Once you have completed this list, rearrange your credit cards so that the card with the highest interest rate is at the top and the card with the lowest interest rate is at the bottom. Now add up the required monthly minimum payment for each card. At this point, it should be your goal to devise a way to pay more money towards your credit cards, over and above the total monthly minimum payments. To do this, you may need to commit yourself to a strict budget, but it will all be worth it once you see significant results in your credit card debt reduction. Each month when you receive your credit card bills, you should pay the minimum balance on all of your cards, with the exception of the card with the highest interest rate. For this card, not only should you pay the minimum balance, but you should also contribute the extra money that you have set aside. You should continue to do this until you have managed to pay off the card with the highest interest rate completely. Now, you should take the amount that you were contributing towards the paid off card and the minimum balance on the second highest interest rate card and put both payments towards paying off this new card. While you do this, continue to pay the minimum balance on each of your other credit cards. You continue this cycle until all of your credit cards have been paid off. It may well take you a long period of time to pay off your entire debt. Any plan for credit card debt elimination takes time and commitment. Remember that as long as you are paying the card with the highest interest rate, the interest costs will stay low. Be patient throughout this process and stay committed to a healthy way of spending that does not threaten your financial security. |
