How To Pay Credit Card Debt

by Gily Tenorio on February 17, 2011

in Credit Card, Debt


Credit card debt is a common concern for many people who have not managed their finances as well as they could have or who are facing financial hardship due to the loss of a job or an unexpected emergency sapping funds. Credit card debt can be a real worry, but need not lead to bankruptcy. Really, it’s fairly simple to pay off as long as you stick to a plan and gradually reduce your debt.

First off, stop using your credit cards. There’s no need to create more debt for yourself and more you will have to pay off later.

After that, if you have multiple cards needing to be paid off, look at their interest rates and rank them from highest to lowest. Then, that’s the order you’re going to pay them off.

Some people think it’s a good idea to start with the lowest to pay a card off entirely, but really that only makes you spend more money because you’ll continue to pay higher interest rates. Work on cutting down the cards with higher rates first so those lower ones won’t hurt you as badly while they’re waiting to be paid.

Next, start making payments every other week instead of once a month, giving half of your monthly total with each payment. Getting into the habit of paying regularly helps trim down your debt and evens out your cash flow as most people are paid bi-weekly. Credit card companies charge interest daily, so by trimming off just a little bit of your debt sooner, you save yourself money on interest accumulated.

When deciding how much to pay, don’t go with the minimum. In all likelihood, it’ll take you forever to pay off what you owe and you’ll just end up owing more because of interest. Work out a budget that takes out a reasonable chunk of your debt each month but that works within your earnings and spending needs, and that also sets a reasonable target date for paying off all your debt.

Lastly, don’t be afraid to dip in to your savings account (in a bank, not an IRA or 401K) to help pay off credit card debt. Do keep some an emergency fund or whatever you’re saving up for, but don’t be fooled that the interest it is earning in a savings account is worth keeping it there for. Credit card debt interest is very high, and anything you can do to accumulate less interest will go a long ways towards erasing debt and minimizing your payments.

Comments on this entry are closed.

clix March 21, 2012 at 06:00

Some say “cut your card in half” so you cannot use it anymore and start paying of the debt. will the bank charge me for the dameged card?

learnfe March 22, 2012 at 12:17

Hi, the best thing to do is to cancel your credit card by calling the bank so you cannot use it anymore.

K Perez March 12, 2011 at 14:33

“When deciding how much to pay, don’t go with the minimum” - you are absolutely correct!!

I found a book with a simple formula for determining payments which will enable one to pay off credit card debts in one year or less. Check it out here -

Garry DC February 17, 2011 at 14:48

Nice read. I also have a post regarding credit card. Funny thing is - my title is Good and Bad Side of Credit Cards.

Gil February 19, 2011 at 09:31

Thanks for the visit. You’re now active in you finance blog. Hopefully many Filipinos learn from our blogs about money and finance.

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