How to Pay off Large Credit Card Balances

Credit cards are a valuable tool for many consumers since they provide access to funds that can be used to make emergency or essential purchases. But many consumers regularly use credit cards for non-essential items. Over time, credit card balances can become overwhelming, especially if your credit card has a high annual percentage rate. However, consumers can pay off high-balance credit cards by creating and implementing a payoff strategy.

Instructions

1

Calculate how much interest you pay on your credit cards each month. Gather all of your credit card statements for the current month. Write down the balance and annual percentage rate for each card. Multiply your current balance by your annual percentage rate (APR). This number should be listed on your statement. If it is not, call your credit card company to obtain it. Divide the annual interest amount (the product of your balance and APR) by 12. This will tell you how much interest you are paying on each card every month.

2

Determine how much of your income you can allocate to credit card payments. Write down your monthly salary, net wages and any other regular source of income. Write down all necessary expenses other than your credit-card payments such as your mortgage, car, and student loan payments, utility bills and groceries. Add up your income and expenses. The difference is the amount that you have left that you can apply to your credit-card balances each month. Use this money to pay them down.

3

Allocate excess income to your credit card balances strategically. Go back to the list that you created in Step 1. Identify the account with the highest interest rate. Pay the minimum payment on all other accounts and pay as much as possible on the highest-interest card. Once that one is paid off, proceed to the next-highest-interest card and do the same. Continue until you are finished with all of them, and you are free.