Experts will tell you that the best way to pay off credit card debt is to make a list of your credit cards with the highest interest rates cards first. Then, for the card at the top of the list, pay off as much as possible each month instead of making the minimum payment.
When that card is paid off, move on to the next high interest rate card and follow the same procedure. This is known as the snowball process.
Of course, if you choose to pay off credit cards with smaller balances, thats fine too. But those high interest rate credit cards can keep you in debt for years and years.
Heres an example. According to Bankrate, Paying just the $60 minimum payment on a $3,000 credit card balance would take eight years to pay off and cost a person a whopping $2,780 in interest. By paying an additional $50 a month, the debt would be paid off in three years and they would be spared $1,800 in interest charges.
In todays economy, this may seem a daunting task. However, considering that the unemployment rate is rising, more home foreclosures are expected, and not only banks but corporations are facing major financial problems, it is important to have the least amount of debt possible.
Will it be easy? No, it will not. Sacrifices will probably have to be made. Family budgets will have to be addressed once again to determine where additional funds can be put toward credit card debt.
In addition, in order to save money to pay off the debt, Bankrate advises that you follow these recommendations:
* Brown bag ten lunches per month
* Have movies and popcorn at home instead of going out
* Use coupons for groceries and buy store brands
* Make pizza at home instead of ordering out
* Buy in bulk and freeze dinner entrees
* Give handmade cards and gifts
* Shop at consignment, thrift and discount stores
There are additional measures you can take to increase the amount of money you save each month, including:
* Becoming more energy efficient
* Bundle the cable, phone, and Internet
* Call credit card companies to have interest rates lowered
* Eliminate magazine and newspaper subscriptions
* Eliminate unneeded telephone services
* Increase insurance coverage
Anything you can do to begin to pay off your credit card debt will only serve to help you in the coming months and years. Most economists assert that the economy will only get worse before it gets better. It is incumbent upon you to be prepared for any eventuality, including setting aside money for any emergency that may occur.