The next question is how do you decide which credit card you should put the $146.88 towards each month (or whatever your amount happens to be). 

The strategy that makes the most financial sense is to rank your cards in order of interest rates, from highest interest rate to lowest interest rate. Then, you pay them off in this order. 

 

For example, if you have three credit cards, one with an interest rate of 15.99%, one with an interest rate of 17.99%, and one with an interest rate of 12.99%, then you would pay them off in the order of highest interest rate to lowest interest rate. 

In this case, pay the 17.99% card first, then when that’s paid off, put your excess money towards the 15.99% card, then finally pay off the 12.99% card.

While this is overall the best financial strategy, there are some cases where it might be worth it to deviate a little bit from this strategy of ordering the cards from highest interest rate to lowest interest rate. 

Let’s imagine that your card in the last example with the 15.99% interest rate only has $450 as its current balance while the other two cards have very high balances.  It might be emotionally better for you to have the satisfaction of paying off the card with the lowest balance and reducing your total credit card debt down to only two cards. 

If you need this emotional satisfaction to help you feel like you are making progress, then make the decision and pay that card off first.  However, realize that you will pay a little bit more interest in the process, but probably not enough to outweigh the personal satisfaction of eliminating one of your credit cards.

The other important factor to remember is to set your monthly affordable amount that you can put towards eliminating credit card debt – and stick to that amount.  As you pay off credit cards and your minimum payments and total amount of debt reduces, it might be tempting to lower your monthly amount as well. 

However, you already know that you can afford that amount – don’t lower it.  Just take the amount that you were applying to your highest rate card, and when that card is paid off, put that money towards your next highest card and so on.

If your affordable monthly amount that you can spend on credit cards is less than the amount that you owe for minimum payments, then take a look at the money management ebook for tips on managing your budget, reducing your expenses, and increasing your income.

So, now that you know how much you owe on your credit cards, the next step is to lower your interest rates as much as possible. 

While you might think that your interest rate is cast in stone, it really is not.  If you haven’t called up your credit card company within the past 12 months to request that your interest rate be lowered, then you are probably paying too much for your interest.