How to pay off your credit cards

Don’t get caught in the credit card trap

We’ve all been there: you need a new set of tires, a tune-up and a new battery and you just don’t have enough cash on hand to pay for it. “No sweat,” says the guy behind the counter. “Just apply for our store credit card and you’ll be able to pay for all of it.”

Before you know it, you’ve got those new tires all without having to get rid of the cash in your pocket. But what you’ve also now got is a potential problem. Every day you don’t pay off your new credit card, you’re adding to your debt in a big way.

Don’t believe us? Here’s an example.

Let’s say you spent $2,500 on a credit card that has an annual percentage rate (APR) of 18 percent. Your minimum payment would be about $50 a month. Not bad, right?

Wrong.

If you paid only the minimum of your total balance due every month, it would take 334 months to pay off your debt. In other words, it would take 28 years to pay off $2,500.

That’s not even the worst part. After those 28 years, you’d have paid a whopping $5,897 in interest. Your total cost for those tires would end up being $8,397. All the more reason to pay off your credit cards as fast as possible.

Here are four tips to getting your credit card debt under control.

1. Consolidate or call your credit card company and see if they’ll lower your rate. If you’ve got several credit cards, the best thing to do is to take those other balances and transfer them to the credit card with the lowest rate. If you’ve only got one credit card, call them and see if they’ll lower your interest rate. It may not happen, but it’s worth a try.

2. Look at your finances and see where you can cut back. You’re going to need every cent you’ve got to get rid of this bill. Where can you cut something back? Do you really need to spend $40 on premium cable channels? Save that $40 a month and after two years, you’ll have an extra $960 to put toward your credit card bills.

3. Put your cards on deep freeze. Literally. If you’re ever going to get this thing under control, you’ve got to stop using your cards unless it is a real emergency. An easy way to hide your cards in plain sight is by putting them in a glass of water and sticking them in a freezer. That way, if you need them for an emergency, you’ll have to wait for them to melt before you can access them. And when we say real emergency, we mean it. Hospital stays, fixing a broken down car and home fires are emergencies. Shoes, stereo systems and birthday presents are not.

4. Put yourself on a plan. Now that you’ve evaluated your finances and cut back on extra expenses, it’s time to put that money toward your credit cards. Decide what the maximum amount you can pay each month and then stick to it for as long as it takes – no cheating unless it’s a true emergency. If you’re having a hard time paying more than the minimum then figure out what you can do to bring in more income. Can you pick up extra hours at work? Will a part-time job work with your schedule? Do you have a closet full of clothes that you could sell on eBay? You need to do whatever it takes to pay off your credit card bills as fast as possible.

With a little bit of sacrifice and planning, you’ll find yourself debt free in no time.