Manage Your Credit Card Debt

Fill in the information in the credit card calculator below for each card you hold that is carrying a balance. You can determine how long it will take to pay off a given card based on a fixed monthy payment and also how much total interest you will end up paying by the time the card is paid off. You can also figure out what the payment would be to have a card paid off in a set number of months and how much total interest you will end up paying based on that schedule. Also, you can mark a card for consolidation by checking the box at the end of the card's row. When you do this, the card's debt will be added to the tally on the Consider Consolidation page. Click the Calculate button below the credit card table to calculate your totals. Also, be sure to scroll down and read the Advice on Eliminating Credit Card Debt.

Advice on Eliminating Credit Card Debt

Stop using your credit cards at least until you are debt-free
This is obvious but it needs to be said. If you want to eliminate your debt then you have to stop borrowing - and that's exactly what you are doing when you use your credit cards. Once you are debt-free, you can start using a credit card again - but be sure not to spend more than you can pay off at the end of each month. Better yet, use a debit card - that way you won't be able to spend more than you have in your account.

Pay off the highest interest rate cards first
If you have multiple credit cards with balances, always pay off the one with the largest interest rate first. Pay the minimum amount on all other credit cards until the one with the highest rate is paid off. The natural tendancy is to try to pay off the lowest balance first since it can be paid off fastest. But your goal should be to to pay off your cards paying the lowest total interest possible. Paying more than the minimum payment on a lower interest rate card means you will be paying the higher interest rate(s) on the other card(s) longer. Play around with the above calculator to see how much total interest you wind up paying based on different fixed payments on different cards. You'll see that this strategy results in the lowest total interest paid over time.

Consolidate your credit card debt
Consolidating your debts makes it simpler for you as you only have one debt payment to make each month. And if you can get a rate that is lower than your credit card rates then you will can save a lot on interest. Of course, you should only consolidate your debts into a loan (or credit card) that has a lower interest rate. To see the difference you can make by consolidating your debts, check far right the box on for each credit card you would like to consolidate, click the Calculate button, and then go to the Consider Consolidation page to see how much you can reduce your monthly payment, and how much you can save in over all interest payments.

Pay as much as you can afford
People are often tempted to "just make the minimum payment". While we recommend doing just that on your cards with the interest lowest rates while making your largest payment on the card with the largest interest rate, you should make your monthly debt-reduction payment as high as possible. Every month that goes by while you are in debt increases the amount of interest you are paying. While making low payments seems like a savings in the short run (more money left in your pocket at the end of the month), it means much higher interest paid over the term of the debt. Play around with the above calculator plugging in low vs. high fixed payment amounts and see how much difference it makes to the "Total Fixed Payments Interest" column total. That's the amount you are paying just in interest on top of the amount you are paying toward the actual balance you spent/borrowed. When you make the minimum payment only a tiny portion of that payment goes toward paying off the balance - most of it goes to interest. Making high payments now not only clears out your debt much faster, but also saves you a lot of money!