Credit card debt is a concern for almost half of American households, according to Stanford University's Hoover Institute, which reported that 46 percent of households in the United States had credit card debt in 2008. It's not an easy process to become credit card debt free, but paying off your credit card debt pays off with increased spending money and improved credit scores, so the effort is well worth it.
Step 1
Collect all your credit card statements, and add up the minimum monthly payments for your cards. Make sure your budget can accommodate that minimum amount. If you can't make the numbers work, look for things you can cut from your budget, such as cable service or lunches out, to make up the difference. If you still can't make your monthly payments with your current budget, contact a credit counseling service such as the National Foundation for Credit Counseling at (800) 388-2227.
Step 2
Plan to pay off your cards with the highest interest rates first since their finance charges grow significantly every month. Instead of paying the minimum balance on these cards, pay as much as you can afford every month. If you can, double your minimum payment each month.
Step 3
Once you've paid off your high-interest cards, apply the money you were spending on those monthly payments to your other credit cards, starting with the card with the smallest amount of debt.
Step 4
As you pay off cards, apply the money you were spending on those cards to the balance on the remaining cards.
Step 5
Avoid using your credit cards to make any new purchases as you are paying off your debt. If you need to, hide your cards from yourself by locking them in a drawer and giving the key to a friend or freezing them in a block of ice so you have to thaw them out to use them.
Tips and Warnings
- Don't automatically close an account when you've paid it off, since doing so can negatively impact your credit score by decreasing your total credit, according to Consumer Credit Counseling Service.
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