If you review the balance of your credit cards, you may feel overwhelmed. Credit card debt can accumulate to a point where it seems unmanageable. Instead of paying the minimum on credit cards, work towards lowering the balance. Lowering the balance on your cards can help improve your credit score and gain approval for lower interest rates. Once you have lowered your balance, it is important to avoid using the cards again and re-building up the debt.
Step 1
Make a list of all the credit cards that you have, the interest rate and the current balance on each card. You will also want to write out the budget you have available to you to pay off this debt. This list can help you make a plan of action on how you can pay down the balances.
Step 2
Pay the minimum on all cards except for the card with the highest interest rate. All extra monies should be made towards lowering the balance on that card. Once it has been paid down or off, you can work towards paying down the card with the next highest interest rate.
Step 3
Use any extra money that you have to pay down your credit card balance. If you are paying back your debt at a high interest rate, consider cashing out your savings or investments to get the balance down. A home equity loan or a loan against a 401k plan can also be used towards lowering the credit card balance since these loans will typically be at a reduced rate compared to your line of credit.
Step 4
Consider debt negotiation. If you have found yourself unable to pay down your credit card balances, you may be eligible to use a debt negotiation service. This service allows you to settle with a credit card company and pay back a lowered amount. This type of service is typically reserved for people that are in default and have been entered into collections by the credit card company.
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