• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Pay Off Your Credit Cards with 3 Simple Steps

Paying off any amount of credit card debt can often seem like a daunting and intimidating process. However, with just a bit of time, attention to detail and patience, paying off your credit cards in 3 simple steps is entirely possible. To start, follow these three simple guidelines to help you to save money and ensure a favorable credit score:

  1. Identify cards with the highest rate
  2. Focus on cards with the lowest balance
  3. Pay off  cards as quickly as possible

It is important to point out that paying off credit card debt is going to be different for every individual. Especially if you have a limited amount of financial capital, paying off debt is not always as “simple” as you would like it to be. Because the process of paying off debt might differ based on how much debt you have and how much debt you can realistically pay off, below are three tips to help make the process as pain-free as possible.

Pay Off Your Credit Cards

Identify Cards with the Highest Rate

Every credit card comes with an interest rate and the interest you pay varies based on the financial institution issuing you a line of credit. An interest rate is the percentage a financial institution charges you on the amount of money they loan you. You can usually find your interest rate on your monthly credit card statement. The interest rate will typically be labeled as an APR, or annual percentage rate.

The higher the APR, the more money you get charged in the long run. For example, if you take a year to pay off a $1,000 purchase on a credit card with a 25% interest rate, you can end up paying over a $100 in interest (depending on how much you pay for your monthly payments). With the help of an APR calculator, you can easily determine how much you should pay per month in order to pay the least amount of interest.

If you wish to pay off your credit cards with the highest rates, it is always a good idea to pay more than the monthly minimum. Oftentimes, the monthly minimum will only cover accrued interest, meaning you are only paying off interest rather than your debt. Paying more than the monthly minimum means you can pay off your credit cards by lowering your credit owed.

Focus on Cards with the Lowest Balance

Regardless of how much debt you owe, it is always ideal to first pay off credit cards that have the smallest amount of accrued debt. You will want to focus on cards with the lowest balance for two reasons:

  • Paying off lower balances is easier than paying off higher balances. Instead of keeping up with payments over 4-5 years, you might be able to pay off your credit cards in 1-2 years. Having a lot of credit cards open with small debt might reflect poorly on your credit report.
  • Paying off lower balances is more efficient than paying off higher balances. Since you will pay off your credit cards in a shorter amount of time, you will be less likely to continue adding credit debt. Studies show that completely paying off debt helps boost your financial confidence. By eradicating certain elements of debt, you are more likely to continue paying off other types of debt.

When you focus on cards with the lowest balance, you’re not ignoring cards with higher balances. Basically, your primary intent is paying off more money to cards with smaller balances and less money to cards with higher balances. For cards with higher balances, you might only be paying the monthly minimum, which is okay. Once you’ve completely paid off cards with smaller balances, you can continue to pay off your credit cards with higher balances.

Pay off Cards as Quickly as Possible 

Sometimes it is completely or nearly impossible to focus on paying off cards with smaller balances with higher rates. For some people, it might seem more effective to pay off all cards at the same pace. Though it really depends on your personal financial situation, regardless of what method you use to pay off your credit cards, the best method is to pay off your credit cards as quickly as possible.

The easiest way to find out which method of paying off debt is best for you is by making a spreadsheet. In your spreadsheet, include the total balance, interest rate, and monthly minimum payment, and monthly payment due date.

Credit Card Total Balance Interest Rate Payment Minimum Payment Due Date
Credit Card Name $XXXX.XX XX.XX% $XX.XX MM/DD

Figure 1: Credit Card Spreadsheet

Organizing your debt in a manner like the spreadsheet shown above can help you identify which credit card needs to be completely paid off in the shortest amount of time, and which cards should be paid off to avoid future debt problems.

5 Debt Mistakes to Avoid

Millions of people are in debt, it’s been true since the concept was invented and will be for the foreseeable future. The ways to get into debt are as plentiful as there are people who are in the situation. It can feel hopeless sometimes but you can get through it like so many people have before you.

5 Debt Mistakes to Avoid

Whether you bought a car you couldn’t afford, lost a job that paid more money than you make now or have student loans hanging over your head if you are serious about ridding yourself of the debt there is a way. In fact, there are a few ways, but the wrong ones can put you in worse shape that you were in before. Too many people make debt mistakes but if you continue reading you will be able to avoid them.

No Negotiation

Some people are afraid to call the credit card company, or embarrassed to ask for their help. Others just don’t realize it is a possibility. Whatever the reason a surprising number of people lose out on a significant savings just by making the debt mistake of not calling their credit card company and asking for a lower interest rate.

If the debt is medical they may be willing to negotiate for a lower amount if you can pay a portion of the bill in cash immediately. Figure out how much of the bill you can afford to pay right now and have the cash ready. You may be surprised at how often they will say yes.

If you are legitimately having a problem making the minimum payments ask for help. There are all sorts of programs out there to assist but you’ll never know if you don’t inquire about them. For example payments on federal student loans can be lowered dramatically thanks to the Income- Based Repayment plan.

It’s No Big Deal, Everyone Is Doing It

When everyone else is spending like there’s no tomorrow it’s easy to get caught up in the fun. Swiping the card and feeling that rush of having bags of new purchases or buying lunch for the gang is a temporary high and one you have to learn to let go of it you don’t want to spend the rest of your life under a mountain of debt. The first rule of debt mistakes is not to repeat them.

Thinking they can pay their bills off by winging it

You can’t. If you understood your financial situation well enough to control it naturally you wouldn’t be in this situation. Make a personalized plan that not only works toward removing your debt and avoids future debt mistakes but also helps to build your wealth. Forcing yourself to pay attention to the amount of money you need to pay off those spur of the moment purchases will help you avoid making them the next time.

Old Attitudes = Old Debt Mistakes Repeated

Change doesn’t happen without a conscious effort and it isn’t easy. Some people never get into debt because it is natural for them to be conservative with their income. Others of us do not have that natural instinct and for us changing how we view and spend our money is an essential but monumentally difficult task. Try to make it fun to change your attitude and at the very least consciously decide how to put your new attitude into practice in your daily life. Eventually these practices will become second nature when you stick to them.

Not making fixing debt mistakes a priority

Getting out of debt is a serious business. If you wanted to become a concert pianist you would not also take up boxing. First you’d need to concentrate all of your efforts on the piano and second boxing would damage your hands to make playing more difficult.

Think of debt payment the same way. You need to put 100 percent of your efforts into paying down the debt and any extraneous purchases, no matter how fun, are just setting you back from your goal. Set up a budget and remember to make room in it for things that are important to you, but keep removal of debt as the most important focus.

Try to consider the money you are spending as money you’ll be able to save once the bills are paid. You may begin to realize just how wealthy you could be if you weren’t treating your credit card as if it didn’t come with a consequence.


Freedom from debt is one of the greatest feelings in the world. If you can get there by changing your attitude it is liberating to know you will never again be in the position of feeling under the pressure of credit card bills and debt mistakes. Using the guidelines above you should learn to build your wealth and never fall into the debt trap again.

A Guide on Credit Card Debt Management

So many Americans find themselves in the same situation regarding their debt. They have too much debt and no idea how to eliminate it. Credit card debt makes up the largest portion of debt in most homes. A credit card debt management plan can help you to eliminate some of your debt.

When people find themselves in debt, they tend to be unsure of how to eliminate their debt without getting further behind. It can be very important to some to not influence their credit score any more than it already has.

A Guide on Credit Card Debt Management

The Basics

Follow your payment schedule on time. In order to help your credit score or eliminate your debt make your monthly required payment on time. Late fees will only increase the amount that you owe. Making sure that your account never goes into default is very important.

Communicate with creditors. Whenever you are on a credit card debt management plan it is important to keep your creditors informed. Many times, you find that they have options to help you when you are in need. Ignoring creditors can only make your situation worst.

Pay off credit cards not just pay them down. It is important to a credit card debt management plan to pay off the debt. Eliminating the credit card debt should be the first goal of any good debt management program.

Committing to a plan is the next part of being successful in eliminating your debt. No matter the choice that you make in reducing your debt, be sure to commit everything you have to it. The only way that true success is achieved is through making payments on time and working with your creditors.

Refinance your credit card debt. It can be beneficial to discuss with your creditors the ability to modify your terms to have a fixed payment. This can help when budgeting and trying to determine what you have in extra monies.

Tactics Too Know

I can be important to know some optional tactics to helping you when creating a credit card debt management plan. These tactics might help you to reduce your debt faster or improve your credit score. Each of these tactics requires you to create a budget. Determine where you can cut expenses allowing you to have extra money every month above what your normal basic monthly bills are.

Consolidation Loans

If you still have decent credit you may be able to gain a low interest loan. With a loan, you are able to pay off all the littler debts and then only have one fixed payment. This method can reduce your debt the fastest, because you will be able to negotiate with your creditors to reduce the balance due for lump sum payments.

Debt Snowball

This tactic is one that is designed to keep you motivate by showing the quickest results. This is done by adding any extra money from your budget on top of your minimum payment. However, the trick is to pay off your smallest balance first. When you do this, you will see the results, by losing one card quickly. Then you are able to add that monthly payment into the budget and start over with the next card. This is not always the best option for some, because you are not looking at the interest rates.

Debt Avalanche

This credit card debt consolidation tactic requires a budget as well, however the cards are going to be listed based on their interest rates not the balance owed. Any extra that you have in your budget is going to be applied, above your minimum payment, to the creditor with the highest interest rate. By reducing the highest interest rates first, you are adding more money back into your budget when the debt is paid off. This can sky rocket the ability to become debt free faster. You can lose motivation with this plan, because you do not see fast results.

The Debt Hybrid

This plan relies on your ability to visualize. Take your debt and reduce it to manageable amounts. This might mean that the balance of one card is divided into three amounts. Pay each part off separately. This will allow you to feel accomplished because of your small goals, however it does not actually finish paying of the card until the third goal is complete. This is beneficial because with smaller goals you can pay off your highest interest rates first. You will still feel accomplished because you are meeting those smaller goals. This may not be the program for you if you are unable to able to “pretend” while making imaginary goals.

Having a credit card debt management plan is the most important step to your success. Without a plan, you will not be able to eradicate your credit through the most advantageous plan for your needs.

Managing Credit Card Debt

managing credit card debt

Managing credit card debt can become very difficult if you allow the balances on a number of credit cards to approach their credit limits, start missing payments, or find yourself needing to get cash advances on one card in order to make the minimum payment on another. Sometimes problems managing credit card debt occur solely as the result of one or more unplanned events such as loss of a job, the uninsured loss of a major asset such as an automobile, or a natural disaster such as flood. In most cases however, credit card debt has risen slowly over months or years until the cardholder suddenly notices that their credit card balances have begun to spiral sharply upward as late penalty charges are added to already high balances, and making even minimum payments on all cards sometimes requires taking on extra debt extra debt through “payday loans” or other high interest sources.

What to Do When You Become Aware You Have a Growing Credit Card Debt Problem

Unfortunately, the first reaction of many individuals when they realize that they are beginning to have serious problems managing credit card debt is a combination of guilt, fear, and simply not knowing what to do. That combination often makes them unable to take any immediate actions to resolve the problem. Delays in taking action always makes the job of bringing credit card debt under control more difficult and time-consuming. The first step on the road to financial security is to shine a bright light on the problem. Here how to get started:

  • Clear a table, and make a stack of all of your credit card statements, student loans, home mortgage, and other installment loan contracts such as auto loans.
  • Copy the outstanding balances, interest rates, minimum payments, and other pertinent information for each debt onto a single sheet of paper.
  • On a separate sheet of paper, put your monthly income at the top of the page. Below that, put three list of expenses.
  • In the first list, include expenses that are always the same every month such as your cable or internet service, rent, club memberships, etc.
  • In the second list put estimates of monthly expenses that vary from month to month such as groceries, public utilities, clothing, transportation to and from work, and discretionary spending for entertainment, etc.
  • In the third list put expenses that are not paid monthly, but which occur on a regular basis year after year. This list should include costs such as tuition payments, taxes, insurance policies, costs related to vacations or attending family reunions, etc.
  • As a final step, order a free copy of your credit report from one of the three national credit reporting agencies.

Working With a Qualified Debt Counselor

Getting all that down on paper may not make you happy, but it will make it easier to take the next step toward managing credit card debt, finding an experienced and qualified debt counselor. Here are some suggestions:

  • Call one or two of your credit card issuers and ask them for lists of nonprofit organizations providing debt counseling services in your area. Federal law requires credit card issuers maintain such lists for every community they serve.
  • Improve your chances of getting a well-qualified counselor by focusing on organizations that have been in business for at least five years in the same location. Before visiting any of the organizations meeting that criteria, run their names past your community’s Better Business Bureau or your state’s Office of Consumer Affairs.
  • Walk into at least two of the organizations Okayed by the Better Business Bureau or state Office of Consumer Affairs to pick up a brochure and to get a feel for each place. The brochure should include a clear list of services provided and fees. It also should provide a list of the organization’s national accreditations, and the training and accreditation requirements for debt counselors.

Working Out the Recovery Options

When you have selected an organization to work with, set up your first appointment. Bring your credit report and the two sheets of paper containing your debts, expenses, and monthly income to that first session. Much of the first one or two sessions will involve analysis of those documents and working out a livable household budget that includes savings for non-monthly payments, savings for unexpected emergencies, and an allocation for debt repayment. Based on the availability of funds for debt repayment, the debt counselor will present recovery options that make sense for your financial circumstances. Some of those options might include:

  • Providing guidance on how to approach your creditors to request lower interest rates or other modifications to existing credit terms;
  • Helping you to prioritize the debts you should focus available resources on first;
  • Offering you support in the form of money management training courses or literature;
  • Suggesting that you explore the possibility of a debt consolidation loan, and providing guidance as to the terms you should be able to get, and the banks or specialized lending organizations you should consider applying to;
  • If your income, debt level, or credit score make a consolidation loan inappropriate for your circumstances, the debt counselor may suggest enrollment in a formal Debt Management Program. In typical Debt Management Programs you make a single monthly payment to the plan provider, which in turn negotiates with your creditors to obtain lower interest rates, extended payment terms, and possibly forgiveness of accrued penalty charges or a portion of the outstanding balance. In exchange for those concessions your creditors are guaranteed a portion of the monthly payment the company receives from you. Your credit counselor will explain the impacts participation in such a program will have on your credit score.
  • If you’re only practical option for managing credit card debt is to file a petition in Federal Bankruptcy Court, the debt counselor will explain which Chapter of the Federal Bankruptcy Code you should file under, the costs involved, and the impact filing will have on your credit score.

The Rewards And Dangers Of Today’s New Credit Card Policies

Stack of credit cardsDo you carry one or more credit cards? There was an article recently on the website of WPRI.com that reminded me that they these new policies represent both dangers and rewards.

The rewards

Many of the credit card companies will reward you if you pay your statements when due or pay more than the requisite monthly payment. These rewards can be interest rate rebates or even cash back. Their purpose is to give you an good reason to pay off your credit card debt.

Be careful with rewards cards

With a rewards card if you carry forward a balance just two or three times a year, you will be charged higher interest. In fact, it will generally exceed whatever you’re accumulating in rewards.

Dangerous habits

Some credit card companies’ policies can actually make it too easy for you to lapse into unsafe habits. For example, if you have a problem paying your bill, you might be spared penalties and late fees. You would think this was a good thing but it may not be. The problem is that when you make a late payment, it will go into your credit reports. And this will probably lower your credit score.

How to make the most out of your credit card

There are some things that you can do to get the most out of your credit cards. First, before you sign up for a card evaluate its incentives. Second, if your card came with an interest-free introductory period, pay off your balance before that period expires. Third, make sure you pay your balance in full each month. As noted above, some credit card companies will reward you for good behavior. On the other hand, others may charge you a late fee if you do not pay your bill within 60 days. Even worse, if you exceed that 60 days, your APR might take a bad hit.

If you’re having a problem with credit card debt

Even if you’ve amassed a huge amount credit card debt, you do have options. For example, you could transfer your high interest credit card balances to one with a lower interest rate. If you’re carrying balances on more than one credit card, you need to add up the interest rates you’re paying and then divide this by how many credit cards you have. This will give you an average interest rate. If you find you have an average of 18% or higher, you might be able to transfer all those balances to a new card with an interest rate of 12%.

A 0% interest credit card

If you could qualify for one of the new 0% interest balance transfer cards, this would be an even better option. This is where you transfer all your balances to a new card and pay no interest for an introductory period of six, 12 or even 18 months – depending on the card you choose. All the money you pay each month would then go against reducing your balance. If you were able to heavy up on your payments, you might be able to become totally debt free before your introductory period expires.

Choose debt settlement

If you’re having a really, and I mean really, big problem with credit card debts, you might choose debt settlement. This is also often called debt negotiation because what it requires is for you to contact your creditors and negotiate settlements for less than what you owe. If you’re at least six months in arrears on your payments, you might find the credit card companies would be willing to settle with you. You would have to be a good negotiator to pull this off and you would need to have the cash available to pay for any settlements you were able to negotiate. This would leave a black mark in your credit reports but not as severe a one as if you were to declare bankruptcy.

Click here to read the complete WPRI.com article.

You Might Need A Credit Counselor If …

Payment overdueI read an article the other day that I thought would be helpful to people being pummeled by debt. The article appeared on Bankrate.com. One of the points it made was that if you haven’t had much success coping with debt on your own, you shouldn’t necessarily feel bad about it. Some people are able to shed weight on their own through dieting or by working out regularly but others need the help of a health club or a fitness trainer. So, how can you know whether or not you need the help of a credit counselor? Here are some questions that could help you figure this out.

If your credit card balances are going up while your income is going down

This can be a sure sign that you need some credit counseling help. It’s tough enough to get out of debt if you can keep both it and your income stable. But if you have the two going in opposite directions, you may have a very hard time dealing with that debt on your own.

If you’re paying only your required monthly minimums

Credit card companies just love it when you pay only the required minimum monthly payments on your accounts. The reason for this is because it can keep you in debt practically forever. I saw one example recently of where it would take 28 years to pay off a $10,000 credit card debt if the cardholder made only the minimum monthly payments.

If you’re juggling bills

An example of juggling bills is if you were to get a new credit card and then take a cash advance against it to pay off an existing card. This can start a vicious cycle where your debt ultimately spins completely out of control. The only exception to this is that if you were to do a balance transfer. Transferring the balances on credit cards that have high interest rates to one with a lower rate can make sense – assuming you don’t immediately take a cash advance on the new card.

You’re close to the limit on all your cards

This is not only financially dangerous but can have a nasty effect on your credit score. This is because 30% of your score is based on “credit utilization.” In turn, this is based on the ratio of your debt to the total amount of credit you have available. Supposing that you had $15,000 in credit card debt and a total of $20,000 in available credit (the total of your credit limits). In this case your debt to credit ratio would be 75%, which is way too high and would have a very negative impact on your credit score.

If you’re working overtime to keep up with your payments

The fact that you’ve taken on extra shifts at your work or a second job speaks well of how seriously you take your financial responsibilities. However, this can lead to a lot of physical and emotional stress and can even have a bad impact on your family.

If you don’t know how much you really owe

Sticking your head in the sand and refusing to figure out how much you really owe will only get you deeper and deeper in trouble. You might want to ignore those debts but your lenders won’t. If you ignore them long enough, you could be sued and have liens put on your property.

Do you see a pattern?

It’s not critical if you saw yourself in several of these instances. What would be critical is if you could see a trend. As an example of this, making the minimum payments on your credit cards occasionally might not be a cause for concern. But if you’re making only the minimum payments and are close to the spending limits on your credit cards, you might be a candidate for credit counseling. This would be especially true if you also don’t know how much you really owe.

For more information on this subject, you can read the entire article on Bankrate.com by clicking here.