Are you having trouble staying on top of payments to multiple credit card accounts?  Are interest payments eating up too much of your income each month? If so, plan to pay off your debt. 

Start by compiling a list of all the cards carrying debt and their monthly due dates. That will help you avoid missing payments and incurring late fees. Then plan how you’ll pay off your cards. Some experts advise first paying off the bills with the highest interest rate, which makes good sense mathematically. Some money gurus urge people to pay off the cards with the smallest debts first to create a sense of motivation and momentum. Do what works for you!  

Two other options many take to make the payoff more manageable are to use a consolidation loan or a balance transfer.  

Using a Consolidation Loan to Pay Off Credit Cards

With this option, you’ll work with a bank, credit union or installment lender to roll your various debts into a new loan with one monthly payment. If you’re carrying balances on multiple credit cards, it can make life easier; if you find a loan with a low interest rate, you’ll save money. Either way, you’ll still need to repay the new loan just like any other loan. Be cautious – many lenders advertise low interest “teaser rates” that last only a short period. After that, the interest rate goes up. Always read the fine print.

 

Using Balance Transfers to Pay Off Credit Cards

You’ve probably gotten offers in the mail for zero-percent or low-interest rate balance transfers as a way to consolidate your debt onto one credit card. Like consolidation loan offers, the promotional interest rate lasts only for a limited time, and then it rises. In most cases, you’ll need to pay a “balance transfer fee” -- typically a percentage of the amount you transfer or a fixed amount, whichever is more. If you use the same credit card to make purchases, you’ll pay interest on those purchases immediately – i.e. there’s no grace period -- until you pay the entire balance off in full (including the transferred balance). 

Finally, keep in mind consolidation loans and balance transfers are not quick fixes. If you keep making more purchases with credit, likely you won’t succeed in paying down your debt. Take a hard look at your spending, and why you got into debt. If you’re really having trouble with debt, consider working with a consumer credit counselor who can help you tackle the root cause.