2 Methods To Get Rid Of Excessive Credit Card Debts
by Michael on 14/08/10 at 4:41 am
If you have an excessive credit card debt you can get rid of it. There are various ways that you can follow to improve your debt situation better. Here are 2 methods that you can follow to get rid of your excessive credit card debt .
1. The Snowball method
You can use the Snowball method to reduce your excessive debts. Follow these simple steps to take help of the Snowball method.
- List your debts from lowest to the higher ones - You have to list all your debts from lowest balance to the higher ones. Make a note of the balances as well as the minimum payments on them.
- Make minimum payments on each debt - Make minimum payments on each of your debts. Try to pay more than the minimum amount on your smallest debt so that you can pay off this debt faster. This will help you eliminate your debts one by one. Pay off your smallest debt completely; use the money that you were paying on this debt to pay off the next smallest debt.
- Continue the process - Continue this process unless and until all your debts have been paid off one by one. When you use the Snowball method, you find certain advantages. You may gain confidence as you will be able to eliminate your debts one by one. It also has another advantage as you can pay off your debts in a systematic way.
2. The debt Avalanche method
You can also use the Avalanche method to get rid of your credit card debt as soon as possible.
- List debts from highest to the lowest rate – List your debts according to the interest rates. Order the debts from the highest interest rates to the lowest interest rates. But be careful to take into consideration all the accounts.
- Make minimum payments on each of your debts – You must make payments on each of your debts except the highest interest rate debt.
- Pay your highest interest rate debt with extra cash – Now, pay your highest interest rate debt with your emergency fund or savings. After paying your expenses, use your remaining income to pay off your highest interest rate debt.
- Repeat the process – Repeat the process each month. When you find that a debt is paid off, delete it from the list and re-order your debts again.
Thus, you can reduce your excessive credit card debts by following either the Snowball method or the Avalanche method.
