Eliminate Credit Card Debt

With credit debt comes the necessity of planning out your future finances, budgeting your money today as well as tomorrow and getting smart about how to manage your credit. It’s about both the short-term and long-term viewpoint, and if you don’t strategize, it can be a major stress. Use the tips below to intelligently plan out your debt payment, while using your credit cards wisely in the here and now.

1. Create a Budget and Track Your Progress

The first thing you're going to need is a plan to attack your debt strategically month-by-month. You should make yourself a monthly budget. Plan out how much you’re able to pay per month and weigh that against your income, expenses and other financial considerations. Make this budget a living document that you can update and change as needed, and add or revise goals as you go. Then, keep track of the progress you make to stay organized and focused.

2. Consider Alternate Forms of Payment

Responsible use of credit cards, combined with timely payments, helps build credit history. That said, sometimes it's important to use alternative types of payment in order to better manage your budget. Consider using a debit card in some situations. You still get the benefits of tracking your spending when the purchase shows up on your statements.

3. Try Payments Between the Minimum and Total Due

Can you pay more than the minimum due? If you can do so without compromising your basic living expenses and emergency budget, you should. Paying a compromise amount between the minimum payment and the total bill is a great way to make progress on your debt over time and feel good about that progress.

One simple way to do this is to pay the minimum twice. When your monthly bill comes, pay double what's listed as your minimum payment, or pay the minimum again in two weeks, at the midpoint between monthly bills.

4. Attack the Highest Interest Rate

You've probably heard this before if you've ever talked to a financial advisor. If you owe money on multiple credit cards, there’s a high probability that one of your cards carries a higher interest rate than the others.

The theory is simple: paying down the card with the highest interest rate means eliminating the debt that can potentially compound the fastest. If you have the budget to pay most or all the debt on one of your multiple cards, pick the card with the highest rate and pay that one off first. Do this gradually, and be patient: don't spend your entire reserve on paying the debt down. Keep enough of a cash reserve to avoid running out of money and prepare for any emergencies. Leave enough room in your budget to pay the minimums on your other cards.

An alternate strategy that you may find just as effective is to pay down the lowest balance first. This helps you to owe debt on fewer cards overall.

5. Draw on the Benefits of Your Card

Every credit card comes with different features, some of them obvious and some less obvious. Most people know, for example, that a credit card comes with a unique interest rate, minimum payment per month, and potential benefits like rewards points or cash back. These features are usually established when you first apply for the card.

Many cards, however, contain less obvious benefits that can help you to manage your overall budget. For example, you may have seen a credit card company mention something called "price protection," but what does that mean?

Price protection means that if you buy an item, and the cost of that item goes down within a certain time window, usually between 30-60 days (as established by the credit card company), you can get a refund on part or all of the original price. It’s a feature that can potentially save you hundreds, which you can then use to help pay down your debt.

When examining the feature list of your new or existing credit card, check the list for benefits like this and make sure you’re using your credit card as wisely as you can.

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