Overwhelmed by Credit Card Debt? Cut back on fun and pay it down.

Make some serious changes to your spending habits, concentrating on the discretionary portion of your budget. Take another look at that cable bill, your entertainment budget, and how many times per week you go out to lunch or dinner. You may be able to save enough to start paying more than the minimum each month.

As an illustration, a $5000 credit card balance at 21% will usually require a $137 minimum payment each month. Paying off the card by sending in the minimum (which decreases as the balance goes down) will take a ridiculous 27 years. Paying a constant $137 per month will take 59 months, or just shy of 5 years. Upping that payment to $200 per month will retire the debt in 34 months, and save you oodles of interest along the way. Check out this bankrate.com calculator - it figures all this stuff out for you.

Once you have a card paid off, don’t close the account. Otherwise you’ll damage your credit score and won’t have the credit line available should you need to use it again. If you do charge a purchase on a card with no previous balance and pay the entire amount off by the due date, no interest is charged. That’s the only way Joe SuperSaver uses credit cards – charge it and pay it all off. To save even more money, Joe uses rebate credit cards that offer a percentage of the charges as cash back. Two of his favorites are the Chase Freedom Card and the Chase BP Card.

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