Paying off credit cards is one of the best ways to go about saving money. Many people don’t realize exactly how much money it is that they are paying in credit card interest. For example, a person may go to a store and buy an item that is 10% off its regular price. That’s a great way to go about saving money, but if you pay for that item with your credit card and then only make the minimum payments, you will actually have wound up paying more for the item in the long run.

To go about paying off your credit cards, you need to first figure out how much money extra it is that you have each month, after your regular budget and savings, to put toward paying off credit cards. After that, you need to examine your credit card statements to see how much interest you are paying on each of them. You will need to rank your credit cards, in terms of their respective interest rates, from lowest to highest.

Now, you are ready to really start paying off credit cards. Each month, you will send that extra money you have to the one credit card with the highest interest rate. Once that particular credit card is paid off, you will then start sending both the extra money and the amount that you were paying as a minimum payment on that first credit card to the credit card with the next highest interest rate. By keeping up this pattern, you will find that, not only will you be saving money on interest from the beginning, but you will be paying off your credit cards in no time.

If you find that you are having a hard time paying off credit cards, the other thing that you may be able to do is to call the credit card companies and ask for a reduction in the interest rate. Not only will lowering the interest rate help you in saving money, it may make the payments more manageable for you.

Posted in Home Budget

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