Learn How To Pay Off Credit Cards

8 Tips for Paying Off Credit Cards

if your bills are piling up, it's time for you to figure out how to pay off credit cards and put your debt behind you. your best solution depends on the resources you have available. you can get a firm grip on your debt problems, relatively easily, if you have have strong cash flow or own valuable assets. it is far more difficult to figure out how to pay off credit cards, if you're struggling to pay your bills each month.

8 tips to pay of your credit cards

1. make a budget: preparing and maintaining a budget is a basic step towards good financial health, whether your financial problems are minor or serious. you need to know what is coming in, what bills you have to pay each month, and how you spend your money. use the bills.com  to get started.
2. control your spending: a budget is a great tool to help you figure out where you can trim your spending. you have to get control of your spending and to stop running up new debt, if you want to become debt free. once you manage to control your spending, you’ll have more money to use to pay down your debts.
3. don’t make only minimum payments: paying only the monthly minimum amount your creditors require is definitely not how to pay off your credit cards wisely. it's best for your creditor's pocketbook, but not yours. paying minimums adds years and years to the time it takes for you to get out of debt and you'll end up paying a lot more in interest, too. for example, if you owe $15,000 in credit card debt and carry an interest rate of 18%, paying the monthly minimum will take you 17 years longer to pay off your debt and cost you almost $9,000 more in interest than paying $450 per month each month. $450 is 3% of $15000 and 3% is likely the required minimum payment on a $15,000 balance. the key is not lowering your payment when your minimum payment drops, but keeping your payment fixed at the $450. use the bills.com minimum payment calculator to punch in your debt and interest rate and see how much you can save by avoiding the minimum payment trap.
4. pay more effectively: it is common sense that putting more money towards your debts each month is going to get you out of debt quicker. but, if you have extra money to use, you still have to figure out how to use it. there are some different strategies you can employ. you can:
   1. pay your smallest balance debt first. this way, you pay off a debt as quickly as possible, crossing one of your creditors off your list of debts owed.
   2. target high-interest debt first, saving you the most in reduced interest costs.
   either approach is fine. both require that you don’t reduce the total amount you pay out each month, taking anything you were using to pay off a creditor and putting it towards paying off the next debt you target. in this case, how you pay off your credit cards is less important than is picking one approach and sticking with it.
5. use assets you own: if you own valuable assets, consider using them as collateral can help you speed up your time to becoming debt free.
   • cash-out refinance: if you have equity in a home, strong credit, good income, and steady employment, a cash-out refinance can be a great solution. you can pay off your credit card debt and save you a lot of money, especially considering today's low mortgage interest rates.
   • 401(k) loan: loans from your retirement account generally have reasonable interest rates, so it can be a good way to pay off high-interest rate debt. just make sure you pay the loan back as agreed, in order to avoid penalties and taxes.
6. consolidate debt: consolidating debt is another effective way to pay off credit cards. you can use a balance transfer to move high interest debt to a 0% or low-interest credit card. an unsecured debt consolidation loan may also work to lower your interest costs and get you out of debt more quickly. however, both of these solutions require excellent credit.
7. speak with creditors to lower your rates: if you have a good track-record with your creditors, you should speak with them to see if you can get your interest rates lowered. this may or may not work, but this solution does not cost you anything to put into place.

When Professional Help is Necessary

All of the strategies above are effective, for the right person. Unfortunately, there are times when there are no easy solutions to a debt problem. If you can’t solve your debt problem on your own, you need to examine the professional debt relief options that are available.

1. Debt Relief Alternatives You have three choices in debt relief: Bankruptcy, debt settlement, and credit counselling.
   • Bankruptcy: Bankruptcy is the true option of last resort. Because of changes to bankruptcy laws that were put in place in 2005, it is much harder to qualify for the type of bankruptcy that clears out your debts. There are two types of bankruptcy:
     • Chapter 7: If you qualify, this form of bankruptcy wipes out all qualified debt in a short period of time.
     • Chapter 13: A 5-year court-supervised payment plan for all qualified debts that creditors must accept. At the end of the 5-year period, most debts are wiped out.
     If you feel you can’t afford the payment that a credit counseling service or debt settlement program requires, speak with a bankruptcy attorney.
   • Credit Counseling: A credit counseling program is a good option, if high interest credit cards are your biggest problem. Don’t expect a big reduction in the size of your monthly payment, but if you see the program through you will pay off your enrolled debts in about 5 years.
   • Debt Settlement: If you are experiencing a serious financial hardship, look into debt settlement. A debt settlement program has a low monthly program payment and will get you out of debt for the lowest overall costs while avoiding bankruptcy.