How to pay down card debt step by step: Plain Dealing

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on November 12, 2011 at 12:00 PM, updated November 01, 2012 at 3:08 PM

I want so much to pay off my credit card debt. I have four cards. What advice do you have?  -- Dolores Glinka, Strongsville

Ever since the Credit CARD Act began requiring statements to carry better disclosures about how much card debt really costs, people have become a lot more motivated about paying off their cards.

Many consumers were startled to find out how little the minimum payment shaves off their balances. One reader who owes $9,600 on a card with an 18.99 percent interest rate discovered that if she pays only the minimum, it would take her 26 years (and cost an extra $14,256 in interest) to pay off her card.

"I may be dead by then," she wrote.

So if you're feeling a little overwhelmed, you're not alone.

Take another look at that disclosure box on your statement, though. In addition to the grim news, it also shows you how, by making much larger payments, you can pay off your card debt faster – and save hundreds or even thousands of dollars in interest.

Even if you can't swing the accelerated payment suggested in your statement, if you can find an extra 10 or 20 bucks to add to the minimum payment, you'll dig yourself out of debt faster.

Whether you owe on two cards or on 10, the basic formula is the same:

• Target one card for bigger payments. Select a card on which you will make a large fixed payment every month. For example, decide the card minimum on your current bill, plus an extra $10, $25 or $50 – more if you can manage it.

Thanks to the Credit CARD Act, your card issuer must apply any money you pay above the minimum payment to your highest-interest debt.

Which card do you target?

It's generally better to pick the one with the highest interest rate, because that's your most expensive debt. Some people choose the card with the smallest balance first, because they believe that a faster victory will motivate them to tackle their more problematic cards. The most important thing is to pick a card and stick to the plan.

How much you put toward your card is going to depend on your finances, but you can use a credit card calculator like the ones at or to figure out how fast different payments will get you debt free.

• Pay your bills on time every time. Don't get so enthusiastic about paying off your targeted card that you can't make at least the minimum payment on your other credit card bills. It's no good making a super payment on one card if you get slammed with late fees and penalty rates on another.

• Build on your success. When you get done paying off the first card, start on your next highest-interest-rate card.

But don't slack off. Add your supersized payment (your old minimum payment plus the extra) to the minimum payment you're already making on that next card. That way, you're growing debt-free even faster.

• Lay off your cards. You don't have to stop charging completely, but restrict use of your cards. Don't charge anything unless you trust yourself to pay it off right away – which means before your next statement arrives.

Get a notebook and keep track of new charges so you don't overspend. Your motto should be "no new debt."

Why not just stop charging?

First, your card issuers might close your accounts for nonuse. Having a creditor close an account while there's still a balance owed really whacks your credit score.

• Don't shuffle cards. Once you pay off a card, don't be too quick to close it. Your score is influenced in part by how much debt you have in relation to your available credit. If you owe a lot on cards, you're going to need that "unused" space on your credit accounts to lower your debt-to-available credit ratio.

Once you're able to get the majority of your cards down to a zero balance – and keep them there -- you can safely start closing those old high-interest accounts and replacing them with lower-interest cards.

• Stay on task. As you make a dent in your debt, the minimum payment your issuer requires may drop. Don't let that lull you into paying less. Try to keep the total monthly amount you're paying toward your credit card debt the same until you're debt free.

That said, if you get a tax refund or pay off a car loan, consider using that freed-up money to reach your goal of being debt free faster.

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