credit cards

Pay off debt from the highest credit cards

Certain credit cards can be enticing, but if you're not paying off the balance in full every month and it has a high annual percentage rate, you may be contributing to your own personal money pit. The highest credit cards often offer plenty of rewards or other incentives along with an APR that can reach the stratosphere. Before it damages your credit even more, start paying off that debt.

Make a plan

If you have multiple cards with compounding debt, it's best to make a plan. Take a close look at all of your credit cards and figure out which have the highest interest rates. Plan to pay off a little bit each month, but make it realistic. If your goals are not realistic, you might not meet them. Track your spending for a month, and figure out how much you can actually afford to pay. Bankrate.com offers a credit card calculator to help you figure out what it will take to pay off your debt.

Attack the highest credit cards

Most experts agree that you should pay off the credit card with the highest interest first. If you can, pay it off in multiple minimum payments per month. The balances with a lower rate aren't as much of a concern right now. Pay only the minimum payments on your credit cards except for the card that has the highest interest rate. Concentrate the payments on the highest credit card account until the debt is paid off, then repeat the strategy with the next most expensive debt.

Another strategy is to pay off the smallest balance first and pay the minimum on other accounts. Once one account is paid off, repeat the strategy with the next lowest balance. The "snowballing" approach is mentally rewarding, but the other method makes the most sense financially because you are paying off higher-interest debt first.

Up the ante

Pay more than the minimum on the card balance. You may be saving money monthly by paying off a small amount of the credit card, but the interest that you're racking up will get you in the long run. Even paying $50 to $100 more than the minimum can save you in interest fees. Pay as much off as you can without breaking the bank.

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