Two standard strategies for paying off credit card debt include using extra cash to pay down the card with the highest interest rate immediately and paying off the card with the lowest balance first. The first strategy is the fastest way to reduce debt, but the second strategy provides the psychological benefit of eliminating a bill faster.
Both strategies create a debt snowball effect. As each credit card bill is eliminated, more money is available to pay down the remaining credit card balances.
Before deciding on a strategy, it is important for the debtor to take stock of his financial situation. This can be accomplished by writing down the balance, minimum payment and interest rate of each card. It is also helpful to track expenses carefully and look for ways to eliminate or cut back on variable expenses, such as eating out. It is also critical to create a budget and stick to it.
Borrowers can also attempt to reduce the amount they must ultimately pay back by requesting interest rate reductions from their credit card companies. The success of these requests often hinges on the borrower's credit score. The better his credit, the better his chances of having these requests granted.