In Over Your Head: Which Credit Card Should I Pay First?

Credit card debt can be best described as overwhelming. When tackling the repayment of credit card debt, it is important to create a debt repayment plan. A debt repayment plan will organize the process and allow the cardholder to become debt free quicker than they would while haphazardly repaying various credit cards. The debt repayment plan includes a schedule of debt to be repaid, combined with interest rate and monthly payment information.

When combining your debt repayment schedule, which debt should you pay first? There are two popular methods of debt repayment. Both of these methods include repayment in full of balances on credit cards, while maintaining minimum monthly payments, to protect the credit rating and maintaining a good credit history with the credit card companies.

The first method of debt repayment includes making a list of the debt including the amounts of the debt, the interest rates of the debt and how much the debt is costing the card holder on a monthly basis. After the list has been computed arrange the debts from the most expensive to the least expensive. The most expensive debt is to be paid first, which will save the card holder money each month. Remember, other minimum monthly payments must be maintained to preserve the credit rating throughout the repayment process.

The next method of debt repayment allows the cardholder to see gratification quicker, as the smallest amount of debt is paid first, working your way up to paying the larger amount of debt.

How much money per month should be allocated towards debt repayment plans? Experts recommend that debt repayment should not consist of more than fifteen percent of the budget – doing so can increase the chances of using the credit cards and credit lines for convenience or to cover other expenses that are being reduced to create this aggressive debt repayment schedule.

To adhere with this fifteen percent rule, while trying to make your budget balance – consider taking on a second job. The profits from part time employment can help the cardholder to reach goals quicker and be debt free in a shorter period of time. Many people facing credit card debt often take on part time employment and allocate the complete funds to the credit cards, which will initially free up room within the budget to expedite the repayment process.

Regardless of the method that you choose to repay credit card and consumer debt, it should be adhered to the very end. When a repayment plan includes a well thought-out budget, the plan becomes feasible and it allows the card holder to see that there is light at the end of the tunnel of debt.