| |
Crushing Credit Card
Debt
|
|
by David Berky
How
much do YOU owe on your credit cards?
The average American family is now over $7000 in debt
just on their credit cards. That debt generates an
interest charge of over $105 each month if your card
charges the average 18%. If you have missed a payment
or made a late payment (even by one day!), you may be
paying up to 27% interest or over $157 each month.
Most credit card companies require a modest payment
towards the card balance. Modest meaning from $10 to
$20 a month. To pay off a $7000 debt at $20 a month
you will not pay off this debt for 29 years.
And what about those interest charges? Paying off a
$7000 credit card debt charging an interest rate of
18% and paying $20 a month towards the debt, you will
pay over $18,400, more than TWICE the original debt,
just in interest.
What if you have more than one card? What if your
credit card debt
is over $7000? What can you do? How can you get out of
this hole?
There are some techniques that can help you pay off
your credit card debt and do not require expensive loans, invasive
credit checks, or expensive financial planners and
accountants. You can also save on interest charges by
paying off your debts in a certain order.
The most effective technique is sometimes called the
"snowball" method. The snowball method
suggests that when you pay off one of your credit card
debt you apply that
payment amount to the next debt. Thus the amount you
pay on a debt grows like a snowball rolling down a
hill.
continued
below...
 |
|
|
|
|
|
|
Article Continued...
For example, you
have three credit cards with credit card debt or
debts of $5000,
$4000, and $3000 which are charging you 18%,
27%, and 12%, respectively, and you are paying
$150, $125 and $100 each month. By paying these
required monthly amounts you will pay off your
$3000 credit card first.
Now that the $3000 credit card debt is paid off you have an
extra $100 a month. Put that extra $100 toward
paying off your next credit card debt. Now you
are paying $225 a month on the $4000 card and
the $150 on the $5000 card. With this
accelerated payment on the $4000 card you will
pay off the card earlier and save some money on
interest charges.
Then apply the $225 payment to the $5000 card
for a monthly payment total of $375. Soon this
card card debt will be paid off and you will have $375
extra each month to pay off other debts or
better yet, INVEST!
So,
which debts should get paid off first?
Generally, you want to pay off the debts that
are charging you the highest interest rates
first. In the above example you could have added
the $100 payment to the $5000 credit card rather
than the $4000 credit card. But the $4000 credit
card is charging you 27% where the $5000 credit
card is charging 18%. By paying off the card
charging the higher interest rate first, you
will save some money on interest charges.
If this sounds too confusing, you can enlist
your computer. You can search the Internet for
the keywords "debt reduction
calculator" or you can visit http://www.simplejoe.com/debteraser/index2.htm
and review a product named Simple Joe's Debt
Eraser.
Simple Joe's Debt Eraser helps you create a Rapid
Debt Reduction Plan that is customized to
your debts and your situation. Just enter your
debts and the amount you can afford to pay each
month. The software will create a plan telling
you how much to pay towards each debt each month
until they are all paid off.
You CAN pay off your debts. The trick is to stop
charging purchases to your credit cards and
develop a credit card debt reduction plan. Your plan should
include "snowballing" your payments
and prioritizing the debts by high interest
rate.
Keyword Search: credit card debt
About The Author:
© Simple Joe, Inc.
David Berky is president of Simple Joe, Inc.
which sells the Simple Joe's Debt Eraser PC software. Debt Eraser
can help anyone get out of debt quickly and inexpensively by
creating a Rapid
Debt Reduction Plan. This article may be freely distributed as
long as the copyright, author's information and an active link
(where possible) are included.
|
|
|
|
|
|
More Tips On Credit Cards |
|
|
|
|
|
Search By Type Of Cards: |
|
|
|
|
|
Search By Issuer: |
|
|
|
|
|
Related Credit Card Articles: |
|
The URL you supplied is either not RSS or the site is down at this time. Please check the feed URL or refresh the page. |
|
