A simple guide to paying off your credit cards

3/1/2017

The following is presented for informational purposes only and is not intended as legal advice or credit repair.

If you’ve been carrying balances on your credit cards you likely know full well how much that debt has been costing you. Getting rid of that debt, however, doesn’t have to be complex.

Pay more than the minimum. Continuing to pay only the minimum required payment doesn’t significantly decrease your balance, unfortunately, because your interest compounds every month. Instead of paying only the minimum monthly payment, consider your total budget and try to commit to making larger payments each month.

Understand what you’re working with. First, find out exactly who you owe, how much you owe, and what the interest rate is for each balance. You may also consider contacting your credit card companies individually to explain that you are looking for lower rates. In some cases, credit card companies may be able to offer a revised repayment schedule.

Pick a strategy. Decide which cards you want to focus on. Most experts advise that you tackle the cards with the highest interest rates first (in order to save money in the long run). You may instead prefer to focus on the accounts with the lowest balances, in order to build some momentum and see more immediate results.

Additionally, some credit cards offer a teaser rate if you transfer a balance. Consider doing this only if the interest rate represents a significant savings and you are totally committed to paying off all of your debt before the rate changes. You should not get into the habit of shifting balances from credit card to credit card regularly, as this can be damaging to your credit and simply creates bigger problems down the road.

Use debt repayment tools wisely. Going it alone may work just out fine, but if not, you can always consider using a debt repayment tool to help get you over the hump. There are pros and cons to using debt consolidation loans, debt settlement services, and debt management plans, but all can be effective under the right circumstances and considering your goals. Just make sure you understand the terms and conditions of your agreement beforehand.

Change your behavior going forward. It’s not enough to just get out of debt. Your goal should also be to stay out of debt, at least to the best of your ability. And that may require that you first understand why you got into debt in the first place and what you need to change in order to prevent that from happening again. If you need assistance reviewing finances, consider speaking with a certified budgeting counselor.

Tagged in Debt strategies, Debt settlement, Goal setting

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

Better Business Bureau

MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
Candid

MMI has achieved a Gold Seal of Transparency by Candid (formerly GuideStar), a leading source for insights on thousands of nonprofit organizations. For decades, Candid has provided data that powers hundreds of websites, programs, and applications related to philanthropic giving in order to help grantors make informed decisions.
Trustpilot

MMI is rated as “Excellent” (4.9/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
Department of Housing and Urban Development

MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
Council On Accreditation

MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
National Foundation for Credit Counseling

MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.