A simple Solution to paying off Your Credit Card Debt

It’s advisable to follow Thomas Jefferson, as he said “never spend your money before you have it.” Unfortunately, nowadays a lot of people think of credit cards as a requirement, not a luxury.

The fact is, that almost any people don’t use credit cards the right way. They use them to fund items and impulse purchases which are not a necessity in any way. Then when times are difficult, and the card holder makes a late payment, credit card interest rates shoot astronomically. And 18 percent more people are making late payments in the first quarter of 2009 then they were in the same time period last year, according to recent estimates. This destroy someone’s credit rating, makes borrowing of money more expensive, and can make it impossible to buy a new car or home.

The first step to saving money is to pay off unpaid loans and credit card debt as soon as possible. It only makes sense to use the best credit card offers if you are the kind of person who repays it every month in full. Otherwise the card issuers hit you with fees that average around 18 percent monthly.

If you pay your bill even a day late they can set up your interest rate sky-high, to twenty-eight percent each month or more. And the late payment will affect your credit score, which stands for that other card issuers often have the legal right to also put up your rates of interest even if you’ve made your payments on time.

If you are in debt with $1,000 and only pay the minimum each month (if the minimum you have to pay is 2.5 percent of your balance and you only pay that) it will end up taking you 153 months to get out of debt and you will pay $1,115.41 in interest. And that’s only if you if you never make any late payment and are hit with late fees. The smart plan is to pay your credit card bill in full every month. The alternative is going with prepaid credit cards, in Germany known as Kreditkarten ohne Schufa, only letting you spend money that’s available on your account. If you are deep in credit card debt, pay more than the minimum amount each month, even if you need to take an extra job to do so.

The single most important thing is to pay on time so you do not ruin your credit, drive up your rate of interest, and have to pay additional fees. Put the highest payment towards the credit card with the highest interest rate first. Once that has been paid down significantly and once you have been making all of your payments on time for a few months, you are in a position to call your credit card issuers to try to get a lower rate of interest, but it may take six months or more of payments on time until they will agree.

Your goal is to completely eliminate credit card debt, and to achieve the point where you are only charging what you are sure that you can afford to pay your bill in full each month. Otherwise, you are working and living to support the credit card companies, and you are giving away your dollars to improve their future, but not yours.