Ask a friend what money resolutions they made at beginning of year and your bound to hear them reply “Pay off my credit cards.” Ask them how they planned on reaching that goal and most of them won't have an answer.
The obvious first step to paying off credit card debt or paying down credit debt load is to cut back or eliminate use of your credit cards. For some people this first step can often be most difficult. If you’re used to spending freely with plastic and worrying about consequences later, it’s difficult to break free from this “buy now, pay later” attitude.
To gain control of their careless credit card spending habits, some people cut up their credit cards therefore making it impossible to use them. Others lock up their credit cards or hide them in a safe place and vow to use them only in an emergency.
The second step to paying down credit debt is to pay more than minimum balance due. Most credit card companies require a minimum monthly payment of 2.5% of outstanding balance. For example, if you have an outstanding balance of $1100.00 on a credit card charging an Annual Percentage Rate (APR) of 18.9% your minimum monthly payment would be $27.50. It will take you 66 months or 5.5 years to pay off your balance of $1100.00 making minimum payments. The credit card company will make $676.94 in interest from your use of their credit card.
Monthly payments are purposely kept low by credit card companies so that they can earn as much as possible from interest rate charged to you consumer. Paying just minimum payment will keep you tangled in credit’s web for years and years to come.