3 Strategies to Pay-Off Credit Cards NOW

There are generally three strategies to pay off credit cards early. I’ll go over them real quick and give you a few thoughts and my own opinion as to the best strategy to use to become debt free.

The first strategy is to write down your credit card balances, minimum payments, and interest rate on each card. Take the card with the highest interest rate, pay the minimum on the others and all extra money goes toward the highest interest rate card.

Once you pay off the highest interest card you move to the next card. Here’s an example: Fin. Bank, $1,200, $37. minimum payment, 7.9% interest. Mac. Bank, $4,500, $120 minimum payment, 17.9% interest, and Sal. Bank, $6,500, $129 minimum payment, 18.9% interest.

The highest interest strategy is to pay off the $6,500 credit card first, than the $4,500, then the $1,200 credit card last.

Strategy two is to pay an equal amount extra to all three credit cards. Let’s say you’ve done your homework and found $15 extra a day (see my FROM DEBT TO CASH, the kit for details). Fifteen dollars a day times 30 days in a month equals $450 dollars extra toward your credit card payoffs (see my altitude/snow-bowl example found in: From Debt To Cash, the kit).

The third strategy is to take the lowest balance you owe on a credit card and pay it off first. Under the lowest balance first, what I call accelerated plan, you’ll get quicker results and feel good about your progress.

It’s easy to get discouraged when you owe a mountain of debt.

Under the Accelerated Plan you would pay off the $1,200 credit card first, followed by the $4,500 credit card, and $6,500 credit card last. Here’s how it would look on paper over a few months.

Minimum payment of $37 plus $450 in new found money and you’d pay off the $1,200 card in less than 3 months. The next card balance of $4,500 would be paid off in nine months. The final card would be paid off in 10 more months. A grand total of 22 months and you’re debt free. Remember, always take the money you were paying toward a credit card and apply that money to the new card you want to pay off.

If you do the other two strategies you’ll pay off everything about the same amount of time but it will take longer to pay your first card and the second card. You might save a few dollars in interest by paying off higher interest cards first but you might get demoralized waiting so long to see progress.

And let’s face it. A credit card paid off is a credit card paid off. It gives you a lot of satisfaction knowing you only have two credit cards to go, followed by one card. Paying a few extra dollars to get one card out of the way in a few short months is much more gratifying than waiting 9 months to get past the first card.

The important thing to remember is you need to pay off all of your cards, not part, not most, but all of your credit cards. Whatever strategy you use isn’t nearly as important as doing something. Get off your duff and get-r-done!

David….