How to Pay Off Credit Cards

From LoveToKnow Creditcards

If you’re wondering how to pay off credit cards, you should know that there is no secret formula. Different financial experts have varying opinions regarding the best way to pay down debt, so the trick is to figure out which method works best for you.

Tips to eliminate credit card debt.

Your Spending Personality

What kind of spender are you? The way that you use your credit cards says a lot about what you will eventually need to do in order to get your credit card balances paid off.

Impulse Buyer

If you are the type of spender who whips out a credit card to make purchases whenever you spy something you want but don’t have the money for, you’re an impulse buyer. The most important thing for an impulse buyer to do when trying to pay off credit cards is to stop using the cards. No amount of budgeting will be effective with impulse buyers if they continue to use credit cards every time they want to buy something beyond their means.

Emergency Purchases

If your credit cards have acted as an emergency fund for you and this has resulted in large debt balances, then you fall into this category. The first step in paying off your credit card is to recognize that even though you didn’t use your cards for frivolous purchases, it is still your responsibility to get the balance paid down. Many people in this situation resent their credit card balances because they feel as though the debt really isn’t their fault since it was used to finance an emergency situation – unexpected medical bills, car repairs, or some other situation – but the fact remains that the debt is legitimate and can’t be ignored.

Everyday Use

If you use your credit cards on a regular basis in order to buy groceries, fill up your gas tank, or some other routine uses, then you need to examine why you use your credit cards for these purchases instead of using cash or a debit card linked to a checking account. Do you use the credit cards in hopes of accumulating rewards points, or is the ease of use of credit cards just too tempting to pass up? The truth of the matter is that regardless of the reason for your repeated use of the credit cards, you need to step back and examine how the cards are increasing your spending. Chances are, if you take a look at your spending with a credit card, you will probably realize that you’re spending more than you would if you were to pay with cash. If you fall into this category, your first step should be to transition into making daily purchases using a debit card or cash. Forget rewards points; your main goal should be to get your credit card balances paid down.

How to Pay Off Credit Cards Quickly

Once you have recognized what type of spending personality you have you can get busy with figuring out how to pay off credit cards. You have many options available to you, so the trick is to pick which method works best for you.

Consolidate your credit card debt into one account. The account may be a low-interest credit card or a loan, but many people find that they can pay debt down quicker if there is only one monthly payment to make.
Keep your accounts active, but systematically pay the balances off one by one.
Close all the credit card accounts, shred the cards, and pay off the balances as quickly as possible. Caution: Closing the accounts may have a negative effect on your credit score.
Join a credit card consolidation service, although this method is not a quick solution and will stretch the payments out even further. Only consider this option if you are having serious problems with paying your monthly credit card bills.

Above all else, don’t talk yourself into adding more debt to your credit cards. Paying off credit card debt can be a tedious process, especially if you have large balances, so it’s important to stay dedicated to the method you choose and see it through.

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