How to Get Out of Debt - The Credit Card Shuffle
Getting out of debt is often a balancing act between an individual's income and the amount of money that they owe to their creditors. It can be difficult to keep everything under control, especially if a person has several credit cards that they are struggling to keep up with at the same time. Fortunately, if an individual takes the time to arrange their credit cards by order of interest rate, they may be able to gain some level of control over the amount they owe and save money in the process.
The trick to managing several credit cards at once is to transfer the balances from the higher interest cards to the lower interest once and pay them off first. Of course, this method will not be of any use if an individual does not stop using their credit card during the process. The method of shuffling balances between cards is actually fairly simple once an individual understands the idea behind. Simply put, an individual transfers the balances from their highest interest cards to the lowest interest card and pays that one off first. Once the card is been paid off, the amount of energy transferred to the next lowest card.
While focusing on paying off lowest interest card, an individual will want to pay the minimum payment on the others. As each card reaches zero, the person then moves on to the next and so forth. If a person takes an aggressive approach to paying off credit cards in this way, it will be able to save themselves money by not paying higher interest rates and will be able to get their debt down to a manageable level much more quickly than if they were paying the minimum payment on each credit card that they have in their possession.
It is difficult to overstate the importance of paying as little interest as possible. The difference from a low interest car to a high interest one can be as much as 15% or more. That is a substantial amount of money that can take a real bite out of an individual's monthly budget. Of course, before person can take advantage of an approach like this, they will first need to understand the terms of each card they have. Some cards have restrictions on how much money can be transferred, how often money can be transferred, and may even charge a fee or apply interest to transfer balances retroactively.