Credit cards create for their users a cycle which is vicious: charging for items when you do not have the money, and then finding it very hard to make the payments due to high interest. The average, in the middle, debt that is held by an American is over eight and a half thousand. By making only minimum payments, that American will pay the creditor $17,000, double what they owe. If a payment is late, you will pay much more.

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One failing tactic is to jump from card to card, using low interest rates and promotional deals to the user’s advantage. This fails because before long, there will be no new, good rates, or worse the user will find themselves with more interest than expected, which defeats the purpose.

The average person is left with a quandary, how to pay off the debt without going bankrupt or entering a program, or even getting multiple jobs for extra income? The best (or at least one of the top) method is a cumulative technique. This technique banks on the growing payment you make to cards and loans as you pay them off, one at a time. You need to make a list of all of you creditors, how much you owe them, and what their percentage rate is. Then, there are two paths that you can take. For a morale based approach, order them by money owed, least to greatest. For a more cost effective method, order by interest rate, greatest to lowest.

Then make note of the minimum payments owed to each creditor. For every creditor but the one at the top of the list, you will make the minimum payment every month. For the top creditor, be it with the least debt or highest interest, you will make minimum plus whatever you can scrounge for the payment. The point is to pay off that one debt as fast as possible. Once a creditor is paid off, take the payments you have been making and apply them to the next account. This is the beauty of the approach, because now you are paying the second creditor their minimum, the first creditor’s minimum and however much extra you have. The third creditor will see an even bigger payment, and before too long you will have everything paid off, and you can save the payments you have been making in a savings account.

This is how the two variations differ. Both will have every creditor paid off at roughly the same time. The morale based approach will have you completely pay off creditors sooner than the cost effective approach, since the money apply is going towards a smaller debt. This however leaves the high interest debt accruing interest on money that is barely getting touched. The cost effective method will pay these off first, so in the long run you save money. However, it may take a while before your first debt is paid off, making the journey seem more difficult.

No matter which route you take, before too long, your debt will be completely paid off and you will be free of the pain and hassle of debt. You can then start rebuilding your credit by using cards so long as their debt is paid off by the end of the month, and never maxing a card or delivering a payment late.