Advice on how to paying down Credit Card Debt

It's well advised to follow "never spend your money before you have it," as Thomas Jefferson said. Unfortunately, nowadays a lot of people consider credit cards as a requirement, not a luxury.

It is fact, that nearly all people don't use credit cards the right way. They use them to fund impulse purchases and items which are not in any way a necessity. However when times are tight, and the card holder makes a late payment, the interest rates of credit cards shoot astronomically. In the first quarter of 2009 eighteen percent more people are making late payments then they were in the same time period last year, reported on recent estimates. This plays havoc with one's credit rating, makes borrowing of money costlier, and can make it impossible to buy a new car or home.

The first step to saving money is to repay outstanding credit card debt and loans as quickly as possible. It only makes sense to use the best credit card offers if you are the kind of person who pays it off in full month for month. Otherwise they hit you with credit card fees that average just about 18 percent a month.

If you pay your bill even a day late they can set up your interest rate sky-high, to twenty-eight percent each month or more. And the late payment will damage your credit ratings, which means that other cards which are being paid off on time often will have the legal right to also raise your interest rates.

If you are in debt with $1,000 and only pay the minimum every month (let's say the minimum required payment is 2.5 percent of your balance and you only pay that) it will end up taking you 153 months to be rid of your debt and you will pay $1,115.41 in interest. And that's only if you if you never pay late and are hit with any additional fees. The smart plan is to pay off your credit card bill in full every month. The alternative is going with prepaid credit cards, in Germany known as Kreditkarten ohne Schufa, only letting you spend money that's available on your account. Whenever you are deep in credit card debt, it's well advised to pay more than the minimum amount every month, even if you must take an extra job to do so.

You should always pay on time so you do not hurt your credit, drive up your interest rate, and have to pay extra fees. Put the highest payment towards the credit card with the highest interest rate first. Once that has been paid down significantly and once you have been making all of your payments on time for a few months, you can call your credit card issuers to try to get a lower rate of interest, but it may take six months or more of on-time payments before they will agree.

Your goal should be to completely eliminate credit card debt, and to get to the point where you are only charging what you are sure that you are able to pay your bill in full every month. Otherwise, you are living and working to support the credit card companies, and you are giving away your money to improve their financial situation, but not yours.