If you’re reading this, you probably have more credit card debt than you’d like to
have. Don’t get us wrong – credit cards are a great tool for building your credit score so you can get better
interest rates on big things like mortgages and car loans, and many
potential employers will even check your credit score before they consider hiring you.
But if you’re maxed out on one or more credit cards or too close to your credit
limit, or if the minimum payments aren’t so minimal anymore, you need to take action to pay down your credit card debt.
Follow these five tips to pay down your credit card balances faster and improve your credit score:
1. Put the cards away and stop using them. It’s all too easy to use
a credit card for an impulse buy when it’s right there in your wallet. So put it in a safe place at home while you
are working to pay down your credit card debt. No self-control needed!
2. Find creative ways to pay more than the minimum. Maybe you found
something on sale at the mall that would have been an impulse buy for sure, but you had the self-control not to buy
it. Or maybe you’ve started packing your own lunch instead of buying fast food. Put the money you saved toward
paying down your credit card balance.
3. Sell your stuff. Are you unable to make more than the minimum
credit card payment? No problem. Declutter your house and have a garage sale or eBay-selling blitz to make some
cash off the things you no longer love, use or need. Then use the profits to pay down your credit card balance.
4. Find a source of side money. Tutor, babysit, take a part-time
job – whatever you can do to make extra cash will help you reduce your credit card balances as long as you use the side money to pay down your
5. Make sure you know what’s due when. Many times, people make the
minimum payment because they forgot their credit card payment’s due date, spent the money elsewhere, and didn’t
save enough cash for a bigger payment. Put all your credit card bill due dates on the calendar you use the most at
the beginning of the month so you can plan your spending accordingly.
If you have more than one credit card with a high balance, which do you choose to
pay off first? You could use the “debt snowball” method and pay off the smallest balance first (while making
minimum payments on your other credit accounts on time each month), then apply that payment amount to the next
smallest credit card balance and so on. This is a good psychological trick to play on yourself, because having at
least one credit card paid off makes you feel better about your ability to pay down the other balances.
Or you could choose to pay down the credit card with the highest interest rate, or
perhaps the one with the highest utilization rate – the balance compared to the credit limit for that credit card
account. Increasing your available balance will increase your credit score.
Once you do pay down credit cards to a zero balance, you can cut up the card if you
don’t intend to use it – but do keep the account open, because credit accounts that have been open for a long time
are good for your credit score.
However you choose to go about paying down your credit cards, you’ll need plenty of
self-discipline and determination. But the rewards of having less credit card debt and a higher credit score are
well worth the work.