Common Sense Strategies for Paying off Credit Card Debt

Most people know that the burden of high-interest credit card debt can reduce their quality of life and ability to save money for the future. However, urgent medical bills, a temporary job loss, or even a vacation can run up balances quickly. There is little point in regretting the circumstances that ran up large balances and high interest charges.

However, just paying the minimum balance due on credit cards could mean carrying debt and paying interest for a long time. When people do find themselves in a position to begin paying that debt back, the right strategy can greatly increase their chances of becoming debt free in the future.



Logical vs. Satisfying Approaches to Paying Off Credit Card Debt

People who have balances on more than one credit card might have a hard time figuring out where to begin. An extra $50 or $100 a month might not seem like much when compared with thousands of dollars of credit card balances. However, the important things may not be how much extra money can get applied to balances or which balances they get applied to. The key to success most likely depends upon developing a plan and sticking to it. A little knowledge of human psychology might ensure a debt-free future more than a spreadsheet, calculator, or even a lot of money.

There are two camps when it comes to paying off debt balances. These might be thought of as the Mr. Spock and Captain Kirk strategies. One relies on logic, and the other one relies more on intuition. Either one can be successful, but different types of people will have better chances of success with one or the other.

Mr. Spock: Allocate as much money as possible to pay more than the minimum on credit cards that charge the highest interest rates.
Captain Kirk: Allocate extra money to pay off credit cards with the smallest balances because that reduces the number of credit cards with a balance more quickly
Which Credit Card Payoff Strategy Should You Chose?

Logic and even common sense might suggest that the first strategy should prevail. However, lots of people can stick with the second strategy more easily because they enjoy the satisfaction of meeting short-term goals quickly. This can be compared to successful dieters trying to lose five pounds at a time instead of the fifty pounds they hope to lose in the future.

Plus, this strategy reduces the complication of having to keep track of several different credit card payments, and that complication could lead to missed payments. Saving a few dollars on interest charges might not be as critical as keeping things as simple as possible and enjoying the satisfaction of hitting milestones.