Smart Way to Pay Off Credit Cards

Paying off your credit cards can help improve your credit score. And because you're spending less on debt payments each month, paying off credit card balances provide the opportunity to start saving your disposable income. Some consumers have a routine of only paying their minimum each month. However, getting rid of balances call for smarter, more effective methods.

Instructions

1

Increase payments to get rid of the debt faster. Stop paying just the minimum on your credit cards and begin forwarding larger payments -- whatever you can afford -- to knock down balances. If your credit card companies ask for $20 a month, increase payments to $50 or more. Higher payments reduce the new interest charges and a percentage of the principal.

2

Pay less interest each month to reduce credit card balances sooner. Reduce how much you spend on interest payments by asking credit card companies to lower your interest rate. An interest rate reduction helps because creditors will apply a higher percentage of your monthly payment to the outstanding principal.

3

Stop carrying a balance. Alleviate high credit card balances by paying off balances in full with each monthly statement. Only charge what you can afford to pay off within one month.

4

Develop a cash-only attitude. Assist your debt elimination efforts by using cash and storing credit cards in a place other than your wallet. It's counterproductive to pay down balances and then accumulate new debt.

5

Pay on time. Late payments or skipped payments result in additional fees, which can increase your outstanding balances. Always pay on time (before or on due dates) to avoid extra charges and higher balances.