A Credit Card Debt Reduction Calculator
Most financial experts will tell you that one of the first and most important ways to take control of your financial life is to get a handle on your credit card debt. The high finance charges associated with credit card debt can put a real strain on your personal finances and keep you from achieving your goals and dreams. For many people, excessive credit card debt comes about not from one large purchase, but through many smaller purchases over a long period of time. You can apply this same principle and the tips below to work your way out of this debt.
The Problem with Credit Card Debt
The average credit card debt is currently estimated at over $5,000 per household. At an interest rate of 18%, this translates into a $150 monthly minimum payment. Paying just the monthly minimum on this level of debt and interest rate would mean paying about $2,000 in interest by the time the debt is paid off. Given this, it’s easy to see why minimizing or (ideally) eliminating your credit card debt is one of the best financial moves you can make.
Three Tips for Eliminating Credit Card Debt
Even if you don’t think you have extra money to start paying down your credit card debt, there are immediate steps you can take toward achieving this worthwhile goal.
Stop Using Credit Cards: The first step is to “stop the bleeding”. It is critical that you start by curbing your credit card spending. Use cash or debit cards as much as possible.
Transfer Your Balance to a Lower Interest Rate Card: There is no reason to be paying 18% or more when you could move your balance to a card that offers 10% or less. You should first ask your current card issuer for a lower rate. If you have consistently paid your bills on time, they should be willing to work with you on this. If not, shop around for a better rate. Making the same monthly payment on a lower interest rate will save you interest expense and get you out of debt faster.
Leverage Your Savings: If your savings are earning anything less than the interest rate you’re paying on credit cards, you will get a better return by applying that money toward credit card debt. It’s a risk-free way to achieve a high rate of return.
_________________________________________________________________
The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.
Recent Posts
- How to Calculate a Stock Market Profit
- Three Basic Financial Concepts for Investors
- Understand an Calculate the Capital Asset Pricing Model (CAPM)
- Calculate Your Retirement Savings Requirements
- The Basics of Stock Market Futures Trading
- How to Calculate Internal Rate of Return (IRR)
- How to Calculate Earnings per Share
- What the Par Value of a Stock Means
- Bond Value Calculator
- Some Basic Forex Trading Tips
Leave a Comment
You must be logged in to post a comment.