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Tips for toppling credit card debt

By Lucy Lazarony ·
Monday, November 15, 2010
Posted: 11 am ET

Lingering credit card debt got you down?

These simple but effective pay-down strategies will help you chip away at even the most stubborn credit card debt.

Pick and choose the tips that work best for you.

Pay off the credit card balance with the highest APR first. This strategy makes the most financial sense. The card with the highest annual percentage rate is charging you the highest interest for every single penny that you borrow with the card. So, take aim at those dreaded finance charges by knocking down the balance on the card with the highest interest rate.

Pay the minimum payment on your other credit cards and send a super-sized payment to the card with the highest interest rate. Once you've paid off the credit card with the highest APR, focus your payments on the card with next highest APR and so on. Hold steady with this strategy until your credit card balances are paid in full.

Pay off the card with the smallest balance first. Having trouble staying motivated when it comes to paying down credit card debt? This strategy may be right for you. You boost your payments on the card with the smallest balance, while maintaining minimum payments on all your other credit cards.

Once the card with the smallest balance is paid off, you move on to the card with the next highest balance.

There's something satisfying about paying off a credit card in full. And you'll get the satisfaction of seeing a credit card balance drop to zero a lot faster if you focus on knocking down your smaller credit card balances first. Plus, it may be easier for you to manage one or two credit card payments per month rather than three or five. Hold steady with this strategy until your credit card balances are paid in full.

Automate payments. A good way to stay on track with your pay-down goals is to sign up for automatic payments with your credit card companies. Some issuers allow you to pick the payment amount that you'd like to pay each month. Other issuers only give you the choice of making the minimum payment or the payment in full each month.

Choose a due date and a payment amount that works best for you for each of your cards. Make note of each automated payment in your check register and make sure there's enough money in your checking account to cover each payment.

Wondering what it will take to clear out the balance on a particular card?  This calculator will help you crunch the numbers.

Customize your pay-down plan by choosing the strategies that will work best for you. Once you've settled on a plan, you'll want to stick with it, month after month.

That credit card debt that feels so insurmountable can be toppled one payment at a time.

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November 23, 2010 at 8:56 pm

The Fed government should restrict the variable feature from & increasing interest rate for missing a payment on the due date the credit card companies start with 8% and after you have borrowed they increase the rate to a maximum of 36%. That puts the borrowers in all dificult situation and not able to make payments. The Fed Government should put an end to this only then the borrowers will be able to pay their dues in time.

November 22, 2010 at 10:27 pm

Good ideas.. while the first one makes most financial sense, the second one seems to work better for more people, as staying motivated is the key factor. Automating payments is a great idea, too.

November 16, 2010 at 6:59 pm

Great Post! It is so sad to see companies going out of business because they are not aware of this important information that can help them.