Paying Off Your Credit Cards

Paying Off Your Credit CardsCredit card debt is ubiquitous in today’s culture. You pretty much have to have a credit card if you want to be able to do anything: buy things online, reserve hotel rooms and airline tickets, rent a car and so forth. This is true in spite of the recent turmoil within the credit card industry. It’s easy, since we’re encouraged to use credit cards so often to overwhelm ourselves with debt without really realizing that’s what we’re doing.

So what do you do? How do you pay off your debts without having to resort to living in your parents’ basement and eating ramen for every meal?

Scrutinize Your Bills
Look, especially, at your credit cards rates. What are they? Are your APRs particularly high? In spite of what you might have heard, a 30% APR is not the goal. It’s something that you need to work against. Check for hidden costs and fees.

Talk to Companies
Call each company for which you have a card. Ask them to work with you on your interest rates and fees. If you are a good and stable customer who pays his bills on time every month, the company will want to work with you. You can probably talk them into both lowering your interest rate and raising your credit limit. If you haven’t been a poster child for credit responsibility, that’s okay. The company might still be willing to work with you in exchange for other things, like setting up an automatic payment plan through your bank.

Transfer Your Balances
Spend some time searching out the credit card offers that are best for your current situation. If you have lots of debt being repaid at high APRs, it’s a good idea to look into balance transfers. Find a new card or two, which will allow you to transfer the balance of another card onto the new account at a 0% APR. Most will offer this rate for at least six months. The best ones will offer it for 2 or more years. The longer this period, the better it is for you. Transfer your highest APR accounts to this new card; you might have to do them one at a time to make the repayment process easier for you.

Pay Off the Lowest APR Accounts First
Obviously you want to pay all of your bills every month. It is best, however, to devote the majority of your resources to the accounts with the lowest APRs. Most financial experts will tell you to concentrate on higher APRs so you won’t have to pay as much. Paying off the low APRs first, though, goes more quickly and gives you the motivation and inspiration you need to continue working on your debt even when it’s hard.

Increase Payments Over Time
Whenever you pay off a credit card account, take the payment you’d been paying every month and divide it up between your remaining accounts. This way, you will increase your payments and pay down the rest of your debts even faster. Also allocate a portion of that payment, even if it is only $5 to a savings account.

Guest post by Zintro expert Sara Stringer

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