How To Pay Half Of Credit Card Debt
There are many reasons you need to know how to pay half of credit card debt. Larger house? New car? New swimming pool in the backyard? Sure, we all want our luxuries, but considering the roller coaster economics can be, you might want to look at your finances a little differently, and you aren't the only one.
- Know Your Enemy. Credit card debt is your enemy, making you vulnerable to economic changes, keeping you up at night and imprisoning you in worry and stress. If you feel overwhelmed by your credit card debt, you might have given into to the temptation to make like an ostrich, but you've got to know the facts before you can change them. Find current bills or look online and make a list. Include the card name, balance, minimum payment, and interest rate.
- Gather Your Arsenal. Total up your minimum payments, and then take a good hard look at your monthly budget. The way to pay half of credit card debt off is to pour all the money you can into it, so look for places you can cut back. Can you give up your membership to the community pool for a year, or your expensive cable?
- Form Your Battle Plan. Your first priority is to stop feeding the enemy. Put the credit cards away or cut them up. Organize your household budget so that you can live within your means and not go farther into credit card debt. Your second priority is to meet your minimum payments, every month. Now take the extra money that you set aside (because you're determined to pay half of credit card debt within the next year or so, right?) and put it on the credit cards, too. If you have any cards that are over limit, use this money to bring them under so you won't have the fees. Once you've done that, select one credit card to pay off first. Pay the minimums on all of them and put all the extra toward that card. When it's paid off, take the combined minimum payment and extra payment from that credit card and put it all toward the next one (on top of that card's minimum payment). Some financial planners advise paying off credit cards from highest interest to lowest, and some advise paying the lowest balance credit card and working your way up to the higher balances. It doesn't matter which way you choose; the important thing is to pick your plan and stick to it, even after the glow of your first determination has faded.
As of February 22, 2010, the Federal Reserve created new rules for credit card companies that will make it easier for you to meet your goal to pay half of credit card debt. These include:
- Requiring 45 days notice before increasing your interest rate or making other major changes.
- Giving you the payoff date if you pay the minimum payment, as well as calculating what you'd need to pay for a three year payoff.
- Limiting when interest rates can be increased, and how the new rates can be applied.
- Requiring credit card companies to apply above-minimum payments to the highest interest balances.
- Standardizing payment dates and times so you won't get hit with unexpected penalties.
Credit cards can be useful tools, but when credit card debt gets out of control, it becomes your enemy. The sooner you equip yourself and face your enemy, the sooner you'll pay half of credit card debt and regain control of your finances.