How to Make Multiple Credit Card Payments to Reduce Interest

When you pay only the minimum on your credit card balances each month, you are not effectively paying down the debt. In reality, by paying the minimum you are merely paying a portion of the total accrued interest. The problem with making only minimum payments is that the interest continues to accrue. This could result in your paying on the debt for an unreasonable length of time. Depending on the amount owed, it may take a number of years to completely satisfy the debt. High balances and accruing finance charges can drain your budget and prevent you from ultimately reaching your financial goals.

Instructions

1

Obtain a copy of your credit report. Consumers are entitled to receive one free credit report every year from each of the credit reporting agencies. Having a copy of your report will give you a glimpse of what is being reported about your payment history. The credit report may also include the contact information for each creditor.

2

Get organized. Once you obtain a current copy of your credit report you can create an Excel spreadsheet that includes the total amount owed and minimum monthly payments. Establish a monthly budget. This will also show what you can commit to pay on your credit card balances each month.

3

Create a detailed payment schedule. Stick with your payment plan even when you see your balances decreasing. Resist the urge to splurge and incur additional debt. Keep in mind the goal is to get all your balances to zero. Slacking on your payment plan will slow your progress and result in you paying more interest. Pay down accounts with the highest interest rate first.

4

Make the payments according to your schedule. It is a good idea to contact the creditor when making your payment. Tell the representative where you would like the payment applied. If the creditor is not told that payments should be applied to the principal, they may apply the payment toward interest or toward the next month's bill.