Information on Elimination of Credit Card Debt

With a budget, you know how much you have to contribute to credit card debt.

With a budget, you know how much you have to contribute to credit card debt.

Consider this: If you have a credit card with a $5,000 balance with an interest rate of 18 percent, it will take 30 years to pay off the balance if you only make minimum payments. Credit card debt is expensive, costing you exponentially more than whatever you purchased with the credit to begin with. By choosing a method to eliminate your debt and committing to a plan, you will make your way to freedom from credit card debt.


The first step to getting rid of your credit card debt is to create a budget for yourself so that you can set aside a specific amount of money toward paying off your debt each month. Create a list of your monthly income, then create a list of everything that you spend money on, including credit card payments, bills, groceries, entertainment and transportation. In areas where you can cut back realistically, do so. Put the extra money toward savings and credit card payments.

Highest Interest First Method

Financial advisers generally fall into two distinct schools of thought when it comes to the topic of paying off your credit cards. The more popular of the two involves paying off your card with the highest interest first, while paying minimums on the rest of your cards. Financially, this method makes the most sense; paying the minimum payments on a card with high interest only costs you more the longer it sits with a balance. However, it normally takes some time before you can see the impact of your commitment to pay off the balance, so you must be persistent.

Snowball Method

The other method, called the snowball method, involves paying off the credit card with the lowest balance first while making minimum payments on all your other cards, then moving to the card with the next lowest balance. The benefit to this method is psychological; by seeing your balance shrink quickly, you will be encouraged by your own progress and motivated to pay off your next card even faster. You will save more money by using the "highest interest first" method, but if you require motivation from quick results, the snowball method may help you to actually eliminate all your debt.

Credit Counseling

If you've fallen behind on payments and you're having a hard time making minimum payments, you might consider getting in touch with a credit counseling service. A credit counselor may recommend using a debt management plan (DMP). To avoid becoming a victim of a DMP scam, never work with companies that request an upfront deposit, and ask about the length and terms of the payment plan before making any agreements. The Federal Trade Commission warns that not all agencies calling themselves nonprofit organizations are free. If possible, go to a credit counseling service in person to avoid a fraudulent transaction.


Contact your credit card companies to ask for a reduction in your interest rates. If you have a history of making on-time payments, the companies may agree to lower interest rates, which means that it will take you less time -- and money -- to pay off your balances.


About the Author

Joy Uyeno has been writing about travel, food, fashion, culture and finance since 2005. For three years she wrote a column for the "Honolulu Star-Bulletin" aimed at young and first-time travelers. Her writing has appeared in several local and national publications, including the 2008 anthology "Honolulu Stories." She holds a Master of Arts in writing and publishing from Emerson College.

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