Friday, December 16, 2011

How to Eliminate Your Credit Card Debt

I just heard another "Money Expert" on HLN advise viewers on how to pay off Credit Card Debt. Her advice was to pay off higher interest credit card debt first, and THEN pay off cards with lower balances.

She is forgetting the most important thing. How much the finance charges are, and therefore, how much you are tacking on to your balances.

The problem is that you may have a larger interest rate on one card, but you are paying more interest on another card with a higher balance.

MY advice is MUCH BETTER and it WORKS:

Depending on how long they will take you to pay off, you want to make sure you are paying the least amount to finance your debt, regardless of the interest rate.

FIRST - Look at all the finance charges on your credit card accounts. Start paying off the card that you are paying the MOST monthly for in finance charges in larger payments, and pay the minimum on the rest of the cards.

THEN - You can switch to paying larger payments on another card which you are paying MORE for in monthly finance charges once you reduce the amount you are paying monthly on the first card.

As you get to the point where you can pay off a card in its entirety, DO IT. You will have that much more, next month to apply to the next card you are paying the most monthly fees for.

One by one, watch the debt be reduced until it completely disappears!

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