How to Pay Off High Balance Credit Cards

It's always a good idea to pay off a high balance on a credit card. You can do it little by little or you can do it by trading interest rates. Taking out one loan to pay off another is a short term solution to a problem. You still have the same debt, just different terms. However, this can make the debt easier to handle and with a little focus, you can eliminate it.

Instructions

Trade the Debt

1

Apply for a Home Equity Loan or Line of Credit. If you haven't gotten too far behind on your payments and your credit is still decent, apply for a loan. Home Equity Loans or Lines of Credit can have much lower interest rates and you would only have one payment. This could make your monthly payment easier to handle.

2

Use at least half of the money you save by getting the loan to pay on the principal of the new loan. For example, if you save $200 a month by consolidating the debt into one loan, than take $100 a month and put it towards the principal and pay the loan off earlier.

3

Stop using the credit cards. While you have the consolidation loan, all you have done is trade interest rates. You still have the same debt. Don't make the mistake of charging up your credit cards again and getting into more debt. Cut the credit cards up until the new loan is paid off.

Pay the Debt Down

4

Pay off the smallest balance credit card you have. This solution may take more time than a consolidation loan but you will be far less likely to get into more debt and you won't have a lien put on your home as you would with a Home Equity loan.

5

Take the money that you used to pay the smallest credit card and put it towards the next. Let's say you were paying $50 a month on the credit card you just paid off. Take that $50 and apply it towards the next credit card, along with its monthly payment. The second credit card you work on paying off may be the next smallest or the one with the highest interest rate. If you have one with a particularly high interest rate, you may want to get rid of that one first.

6

Pay down each card with the payment from the last. Each time you pay off a credit card, apply the extra money to the next card until you have them all paid off.

7

Start a saving account. Once you have paid off all of your credit cards, take a portion of the total monthly payments and put it in a savings account. If you just use 50 percent of the money you were using to pay the credit card bills, you will soon have enough in the savings account to cover some emergencies. Then you will not have to use the credit card for that emergency and you will have an easier time staying out of debt.