Mutual-Funds-Advisor.com » 401k Retirement Plan Guides » Eliminate High Interest Rate Credit Card Debt

Eliminate High Interest Rate Credit Card Debt

In order to build a successful investment portfolio you should ensure that you have paid back all high interest rates on your credit card debt. This should be done in order to ensure that your future financial plans are not hampered by the burden of paying unnecessary high interest rates.

The first thing you should do is to take out your balance sheet and list all your debts. Order them by the amounts of interest rates you pay on them by using a separate sheet of paper. You should put on the top the ones with the highest interest rates.

After this you should clearly determine how much you can allocate each month for the coverage of these interest rates. This money should come out of your regular income and represent a priority against other contributions you make to mutual funds or retirement accounts outside of your regular 401k plan. If you make some other contributions, you should stop doing them and allocate this money for the reduction of your high interest rate debts.

The debt you have put first in your sheet of paper as costing you the highest interest rate should be eliminated first. Only after this you should allocate amounts that will eliminate the minimum balance of the debts that appear next in your rank of debts.

After you have paid back the debts on a particular credit card account, mark it on your balance and keep it in a separate place. Don't cancel the card, since this may lead to a decrease in your credit score and a consequent increase in the interest rates of other variable rates. Try not to charge to a credit card you have cleared out and use those that have the lowest interest rates. Otherwise, you can return to your initial position.

This procedure should be repeated until you have eliminated all of the accumulated debts on credit cards or other debts. Even though this process may take a lot of time to fully complete it, you should not give up and apply stern discipline.

All you should do is to find a new source of money for your expenses so that you can avoid charging your already cleared credit cards. We don't recommend the complete abundance of credit cards since there are times when they represent a valuable alternative to giving up cash you can otherwise use for other purposes. You just have to construct a priority list and determine when it is viable to lose a particular credit card and consider the interest rates you will be charged, since the latter represent a cost that should be eliminated at one point or another.

Rate this article : Low
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
High