Shrink Your Credit Card Debt

Everyday more and more people are becoming burdened by credit card debt. Sometimes it comes from a financial slump or from reckless spending. No matter how insurmountable credit card balances may seem it is possible to repay the debt. Just like babies conquer walking by first crawling, you can conquer credit card debt by making small payments as you are able.

The first thing to do is figure out how much you owe. Gather all the latest copies of credit card statements. Draw out a chart including each credit card using a spreadsheet application or a even just a piece of paper. The chart should include the name of the bank, the total balance, minimum payment, and the interest rate. Once you have all this information together, you can better assess your financial situation.

Write out a monthly budget that includes all sources of income and expenses. This will allow you to determine the maximum amount you have to spend on credit card balances. This amount is the total amount of expenses subtracted from the total amount of income.

Once you know how much you owe and how much you can spend to pay it, you can make a plan to pay off the credit card balances. Start by ranking the credit cards by interest rate. The card with the highest interest rate should be repaid first. Pay the maximum amount you can towards this credit card until the balance is paid off. During this time, make sure you keep making the minimum payments on other cards. When you have paid off one credit card, begin paying the maximum amount possible to the card with the next highest interest rate. Repeat the payoff process with each card until all card balances are completely paid.

Take care not to incur any additional debt during this time. After you have fully paid off your credit card balances, be careful not to get into a similar situation. Begin to build up a healthy savings account that can be used instead of credit cards for large purchases.