Reduce Your Spending
It's always best if you start by reducing your spending. Cut any unnecessary expenses for the time being while you build up your savings account so you can pay for emergencies or fund any opportunities that might come up. Pay off any new credit-card expenses every month in full. Reducing your spending now will pay off in the future. Making little sacrifices you can save hundreds of dollars and use them to put money aside for emergencies and for repaying your debt.
Avoid Minimum Payments
Always pay more than the minimum payments on your cards. Most minimum payments barely cover the interest on your balance. If you can only afford the minimum payments, start with the card that has the highest interest rate and pay just a few dollars more every month. Over time, gradually increase the amount until you pay it off completely.
Highest Rate or Lowest Balance
If you can't afford to pay more money on your highest interest rate credit card, choose the one with the smallest balance and use any extra cash that comes your way to pay it. When you pay that card off, take the amount you've been paying on it and add it to the account with the highest balance. Continue this until you dig yourself out of debt.
Request a Home Equity Loan
Take out a home equity loan to pay off credit card debt. The interest rate on home equity loans is usually much lower than credit card rates and it is also tax deductible. This can be an extremely effective repayment method if you are disciplined. Be careful not to abuse the use of this loan because defaulting on your home equity loan could trigger the lenders ability to repossess the property. These loans can be as easy to abuse as credit cards, so you might as well try to exercise some control on your spending.
Balance Transfer Technique
A less aggressive way to pay off your debt is to transfer your higher rate credit card balances to your lower-rate credit cards. This works until you run out of lower-interest opportunities and close your old accounts so you aren't tempted to use them again. A lower interest rate will always let you use a bigger proportion of your income for repaying your debt.
Transferring credit card balances should be done with caution. You can take advantage of 0% APR and 0% Balance transfer promotions but you need to make sure to meet the necessary requirements and don’t exceed the promotional period. Otherwise, you can incur in more debt and fail to achieve your goal of reducing your credit card debt.
