the next lowest card by applying what you paid on the first card to the next card, plus its minimum balance. Continue to roll over each payment to the next card until they are all paid off, he says. See chart for details. To fight the temptation, opt-out of receiving mail-order credit card solicitations by calling 888-5-OPTOUT.
Pay more than the minimum. Many loans are set up so that the minimum payment goes mostly toward the interest. If you can afford it, triple up on those minimum payments. “The fact of the matter is, if you have $10,000 in credit card debt, are paying 15% in interest, and make minimum payments, it will take about 25 years to pay off that debt,” says Lynnette Khalfani, author of Zero Debt for College Grads: From Student Loans to Financial Freedom (Kaplan Publishing; $14.95). “You don’t want to be a slave to the credit card companies.”
That’s a strategy 41-year-old Nadine Gavin, a military officer, implemented to get out of debt. “I was an emotional shopper. Whenever I got upset, I went shopping,” she says. But Gavin got those impulses under control so she could pay down her debt and purchase a house.
“Once I paid off one credit card, with a $15 payment, I’d apply that [in addition to the minimum payment] to another credit card. It made a big difference. It made things go by a lot quicker in terms of getting it paid off,” says the mother of two. She does the same thing now with the monthly $1,500 mortgage on her two-story, five-bedroom home in Killeen, Texas, that she moved into in December. Gavin pays an extra $100 a month to reduce the principal and pay the loan off even faster.
Shop for a better rate. When you get a great opportunity for a lower interest rate, go for it. “Instead of the 15% or 22% interest rate you’re currently paying, you can transfer to a card that offers you a 6% or 9% rate to save hundreds or thousands over the course of the year,” says Khalfani, who refinanced an auto loan from the car dealership to another bank and saved $200 per month.
Shop for better rates at sites like www.bankrate .com, and take advantage of offers provided by your bank, credit union, or other lending institutions that offer low rates for transfers. But don’t bounce around too much because doing so results in too many credit inquiries, which can lower your credit score. Also consider debt consolidation, which is taking several debts and converting them into one monthly payment. For more information, read “In Too Deep” (March 2006).
Stop spending–now! As you pay off your credit cards, don’t cancel them, says Ziegler, who for many years hosted Financial Forum, a radio talk show on Chicago’s WVON-AM. “Instead, take all of the credit cards out of your wallet and put them in a jar half full with water. Put the jar in the freezer.” The idea is to keep the cards out