Paying Down Your Credit Cards
Credit card debt can hurt our credit scores as well as cost a lot of money in interest. High credit card debt also leads to high debt to income ratios or DTI, and high DTI can keep you from qualifying for a home loan even with good credit scores. Keeping balances low on your credit cards is important for many reasons.
It can seem overwhelming when trying to pay down your credit card debt. You need a plan to start whittling down your debt. Here are some tips to help come up with a plan. This is called the snowball effect.
- Take all of your credit cards and put them away so you don’t spend on them. I suggest putting them in a cup of water and freezing them.
- Choose your lowest balance credit card.
- Make double the minimum payment on the credit card. (More if you can afford it)
- Continue to pay all of you other credit cards as you normally would.
- Keep paying on the lowest balance credit card till it is paid off.
- Once it is paid off, take the amount you were paying on the lowest card and add that amount to the amount you were paying on the next lowest card.
- Once that card is paid off, add that amount to the next lowest card and so on till all of your credit cards are paid off.
Hopefully this plan will free you from credit card debt. Do not close your cards afterwards as this could cause your credit scores to drop.
If you would like to learn more about this and other credit coaching tips, please schedule your free consultation with us today.
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