How to Pay Off Multiple Credit-Card Balances

Francine L. Huff
LoanBiz 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.