If one is suffering from large amounts of credit card debt, spread across a number of credit and store cards, then there are a number of options available to ensure that the minimum level of interest is incurred and debts are paid back in the shortest period of time possible.
Reduce Credit Card Debt: List the Sources of Credit Card Debt
The first stage of reducing credit card debt is to carry out an audit of one’s outstanding credit card debts and obligations. Start by making a list of all of the credit and store cards in ones possession, listing the outstanding balance, available credit limit and interest rate charged. Include all credit cards and store cards, including those with no outstanding balances.
Now a list of outstanding credit card debts has been complied, this will give the individual a key set of data which will enable interest charges to be minimised and thus allowing a person to reduce credit card debt at a faster rate. Key points to note at this stage are the total amount of credit card debt, the most expensive and least expensive sources of debt.
Eliminate Credit Card Debt: Rearranging and Paying Back Credit Card Debts
Before paying back any credit card debts, one can make a significant amount of savings in interest by simply rearranging the structure of one’s outstanding credit card balances. In short, savings are made by transferring the balances of the highest interest charging cards onto those with the lowest interest charges.
The next stage is to eliminate credit card debt, the objective here should be to payback the outstanding debts on the highest costing credit cards first. As such, a sensible approach is to assign a total monthly budget for the repayment of credit card debts
Out of this total budget, subtract the minimum repayments needed to service each of the credit cards which are less expensive than the most expensive credit card. The amount of money left in the total budget should then be used to pay off the most expensive sources of credit card debt first. As each credit card is paid off, work logically through the list of debts each time focusing on the highest interest charging card.
In summary, a great deal of time and money may be saved in reducing credit card debt through the two actions of rearranging the structure of one’s credit card debt in the first case and subsequently paying off the most expensive sources of debt first. Despite focusing on the most expensive sources of debt, it is important to ensure that minimum payments are made on cheaper sources of debt, so as to avoid expensive penalty charges.