** Credit Card Debt Relief Tip of The Day **

The Easiest Way to Get Out of Credit Card Debt?

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Thousands of Americans have gotten out of credit card debt, and that may include yourself. The only way to get out of credit card debt is to do more than just paying the required minimum payments each month. You don’t have to do a lot more, though, beyond picking a monthly payment level, and never lowering it. Consider the following example of how you can get out of credit card debt.

A Credit Card Debt

Payment Case Study…

Let’s look at Amy’s situation. She has been trying to pay off her credit card debt for awhile but she isn’t making any progress. According to Amy’s credit card statement, the amount she owes is around $5,200 and her interest rate is 18%. The minimum payment is based on either 3.5% of the balance or $10, whatever is the highest. She is like a lot of people who do not really understand their finances and believe that not using the card anymore and paying the minimum amount each month would eventually get her out of debt.

Here’s the Truth

Let’s assume Amy is not charging on this credit card anymore and she is paying just the amount required by the credit card company based on the way it calculates the minimum payment amount each month. If Amy does this, she will not pay the debt off for 181 months and the amount of interest she will pay will be around $3,700 when she is done. That means 15 years later and $8,900 poorer, Amy will have paid off the $5,200 of credit card debt. That is crazy! You can see why she feels like she is not making any progress on reducing her credit card debt this way.

A Better Approach

There is a simple way to get out of debt faster. Amy’s minimum payment is currently around $180.00 and she is able to pay this easily. If she keeps paying $180 every month until the debt is paid off instead of lowering her payment to match the required minimum as it goes down, she will be much better off. Doing so will reduce the amount of time needed to pay the credit card off to 43 months from 181 months. It will also lower the total interest she ends up paying to around $1,600, which means she will save more than $2,100 of her hard earned money.

She Can Do More!

If Amy really wants to eliminate credit card debt, she should raise the new minimum payment that she is going to continue to pay. If she decides to pay $18 more each month, her monthly payment would be around $200. That would mean she would pay the debt off in 34 months, not 181 months and the amount of interest she would pay would decrease by $2,300.00.

She could increase her monthly payment by $68 to around $250 every month, which would mean the debt would be paid off in 26 months, not 181 months and she would decrease her total interest paid by $2,600. That is a big savings and the debt would be paid off a lot faster.

In order to make a big dent in the credit card debt in a short time, Amy could pay double the minimum payment she is going to stick with until the debt is paid off. This is great if she can afford to do it. If she paid about $360 every month, her credit card debt would be gone in just 17 months. That is less than 2 years!

Summing It All Up

You have a lot of options when it comes to eliminating credit card debt but the method described above is fast and easy and will make a big difference. Anyone can use this method of credit card debt elimination to get his finances back in order. It’s easy! Just don’t charge on your credit cards anymore and pay the minimum payment you have now until the debt is paid in full. Every month you will be paying down more and more principle on your debt and your debt will be gone before you know it.

Filed under: Reduce Credit Card Debt

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