How to Terminate All Credit Card Debt

Dependency on credit cards is a big problem in America. The average family owes $8,000 in credit card debt, according to the American Bankers Association. Making the minimal monthly payments on your credit cards won't help you get out of debt---and you'll end up spending a lot more money in the long run. By developing a well-thought-out plan and following a few basics of money management, you can terminate your credit card debt and move down the path to financial freedom.

Instructions

1

Compile your credit card statements and map out your debt. Create a spreadsheet with four columns: credit card company, outstanding debt, interest rate and minimum payment. The credit card with the least amount of debt should be at the top of the list, while the credit card/creditor with the highest amount of outstanding debt should be placed at the bottom of the list. If two credit cards share the same amount of debt, list the card with the higher interest rate first.

2

Begin paying off the credit card with the least amount of debt first, while continuing to make the minimum payments on the others. This approach was developed by financial planner Dave Ramsey and is known as the Snowball Effect. By paying off the smaller debts first, you'll get closer to a debt-free lifestyle. Each successful payoff will give you the momentum you need to tackle a larger debt.

3

As each account gets paid off, make sure it gets closed, too. You can't truly terminate credit card debt if you continue to borrow against the same accounts. Cancel all accounts once you have paid them off.