Becoming debt free may feel impossible, but with a payment strategy you can successfully climb out of credit card debt. Now, all you're going to need is determination and your credit card billing statements. We're going to get you started with a couple of strategies.
Now, here's strategy number one. Pay off the credit card balance with the highest interest rate first. Take a look at all the billing statements that you have for your credit cards on which you're carrying a balance. Make your largest payment on the card with the highest interest rate and then make the minimum payments on all the other cards until the most expensive balance is paid off. Now, if two cards have the same interest rate, make a larger payment on the card with the larger balance. Next up, tackle the balance on the card with the second highest interest rate and so on. Now, this strategy can save you the most money in terms of the finance charges. Maximize your interest savings by asking your issuers for a lower interest rate on your credit card. Remember a small reduction is still money saved.
Alright, here's something nobody ever thought about, strategy number two. Pay off the card with the smallest balance first. Take a look at your monthly statements for all the cards that you owe a balance on and determine the card that has the lowest balance. Make a larger payment to that card and then make the minimum payment on the others until the smallest debt is paid off. If two cards have similar balances, you want to make a larger payment on the card with the higher interest rate, then tackle the second lowest balance and so on and so on. Now, this strategy will keep you motivated because you'll start seeing fewer and fewer bills. Of course, you still want to look at the interest rates with this strategy. In other words, if the lowest balance has a zero percent interest rate, focus on the card that is actually charging interest.
Choose the plan that motivates you because you're going to be on a debt diet for many months. So choose the payment strategy that's going to help get you out of debt. You might want to think about automating your payments so that you never miss a due date on any of your credit cards. Last year 75 million people turned to Bankrate.com for personal finance advice.