Many financial experts give advice on paying down credit card debt. Although their advice often makes financial sense, it doesn’t always make sense.
Usually, the experts suggest paying off the credit card with the highest interest rate first, while making minimum payments on the others. When the first one is paid off, they instruct you to apply the freed-up money that was going to the first credit card to the next one, along with the previous payment and so on. After the credit cards are paid off, then they suggest starting a savings plan.
This is what worked for me, when I paid off over 20 thousand dollars of credit card debt a few years ago. First, save up a small emergency fund, so that an extra financial need like a doctor bill or car repair doesn’t force you to reach yet again for the credit cards. Shoot for $500 initially.
Next, pay any extra money you can find to the credit card with the lowest balance. Paying this one off first will be faster and will give you a sense of satisfaction and accomplishment. Then, take the money you were paying to that credit card and apply it, along with the previous minimum payment to the credit card with the highest interest rate. When that one is paid off, work on the next one, etc. Do not close down your credit cards after they are paid off-put each one away in a safe place and most importantly, do not run it back up.