How to Pay Off Multiple Credit-Card Balances
Francine L. HuffLoanBiz Columnist
America's love affair
with plastic keeps getting stronger. During 2007 U.S. consumers placed more
than $2.2 trillion in purchases and cash advances on credit cards, according to
CardTrak. But the convenience of using plastic means that many people find
themselves with steadily rising balances that seem impossible to ever pay off. People
with a goal of paying off all their cards need an aggressive plan that goes
beyond making minimum monthly credit-card payments.
Convenience Leads to
Excess
Shoppers can charge everything from groceries to fast food
to rent payments on credit cards. Even some taxis and vending machines now have
credit-card processing capability. That means more people are getting in over
their heads with debt because they're not keeping track of how much they spend.
Stop Impulse Spending
One step to getting out of debt requires curbing all impulse
purchases. The 48-hour rule can help cut spending. In other words, if
Fashionista Fanny sees a designer bag she wants, she must wait 48 hours to
decide if she really needs it. In many cases, after the wait period is up,
people will decide against making a purchase.
Credit-Card Offers Are
Not Welcome
More than 9.2 billion credit-card solicitations were mailed to Americans in 2007, according to Mintel Comperemedia. By shredding up all new credit-card offers, people can resist the temptation to open new credit lines. New card offers can be stopped by:
- Calling the toll free number included in a mailing
- Opting out of new mailings at OptOutPrescreen.com
- Getting
off mailing lists by contacting the Direct Marketing Association at
dmachoice.org.
Pay More than the
Minimum
Increasing monthly credit-card payments is an absolute must
to take a bite out of debt. For people juggling several payments, choosing even
one card to focus on can greatly cut the amount of interest paid out over time.
Choose the card with the lowest balance to direct extra payments toward. Once
that card has been paid off, the amount that was being paid on it should be
rolled over into the one with the next lowest balance.
Use Balance Transfers
Card holders who have balances that can be paid off in six
months to a year may benefit from balance transfer credit-card offers. Usually
this type of offer has a low teaser rate for a short period of time. People who
make payments on time and can keep from adding to their balance often find
these offers to be a powerful tool to help reduce debt. Balance transfer offers
do come with a significant catch: late payments will likely result in the
interest rate being increased automatically.
Paying off credit cards requires discipline and determination.
But with a specific set of realistic goals freedom from credit card debt is
attainable.
Sources
CardTrak
Mintel
Comperemedia
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
