The Best Way To Pay Off Credit Card Accounts

How much do YOU owe on your charge card accounts?

The average American family is now over $7000 in outstanding debt just on their credit card accounts. That outstanding debt generates an interest charge of over $105 each month if your card charges the average 18%. If you have missed a payment or made a late payment (even by one day!), you may be paying up to 27% interest or over $157 each month.

Most charge card account companies require a modest payment towards the card outstanding balance. Modest meaning from $10 to $20 a month. To pay off a $7000 current debt at $20 a month you will not pay off this current debt for 29 years.

And what about those interest charges? Paying off a $7000 credit card account current debt charging an Apr of 18% and paying $20 a month towards the current debt, you will pay over $18,400, more than TWICE the original outstanding debt, just in interest.

What if you have more than one card? What if your outstanding debt is over $7000? What can you do? How can you get out of this hole?

There are some techniques that can help you pay off your current debt and do not require expensive loans, invasive credit checks, or expensive financial planners and accountants. You can also save on interest charges by paying off your current debts in a certain order.

The most effective technique is sometimes called the "snowball" method. The snowball method suggests that when you pay off one outstanding debt you apply that payment amount to the next outstanding debt. Thus the amount you pay on a current debt grows like a snowball rolling down a hill.

For example, you have three credit card accounts with current debts of $5000, $4000, and $3000 which are charging you 18%, 27%, and 12%, respectively, and you are paying $150, $125 and $100 each month. By paying these required monthly amounts you will pay off your $3000 credit card account first.

Now that the $3000 card is paid off you have an extra $100 a month. Put that extra $100 toward paying off your next charge card account outstanding debt. Now you are paying $225 a month on the $4000 card and the $150 on the $5000 card. With this accelerated payment on the $4000 card you will pay off the card earlier and save some money on interest charges.

Then apply the $225 payment to the $5000 card for a monthly payment total of $375. Soon this card will be paid off and you will have $375 extra each month to pay off other current debts or better yet, INVEST!

So, which outstanding debts should get paid off first?

Generally, you want to pay off the current debts that are charging you the highest rate of interests first. In the above example you could have added the $100 payment to the $5000 credit card account rather than the $4000 credit card account. But the $4000 charge card account is charging you 27% where the $5000 credit card account is charging 18%. By paying off the card charging the higher rate of interest first, you will save some money on interest charges.

If this sounds too confusing, you can enlist your computer. You can search the Internet for the keywords "current debt reduction calculator" or you can visit http://www.simplejoe.com/outstanding debteraser/index2.htm and review a product named Simple Joe's current debt Eraser.

Simple Joe's outstanding debt Eraser helps you create a Rapid current debt Reduction Plan that is customized to your current debts and your situation. Just enter your current debts and the amount you can afford to pay each month. The software will create a plan telling you how much to pay towards each current debt each month until they are all paid off.

You CAN pay off your current debts. The trick is to stop charging purchases to your credit card accounts and develop a current debt reduction plan. Your plan should include "snowballing" your payments and prioritizing the outstanding debts by high annual percentage rate.

If you don't have a problem paying credit cards off or you just want a new credit card go to www.JemCreditCards.com. They have great credit cards.