Take Down Credit Card Debt

Finding the right credit card debt reduction strategy for your budget.

You may wonder why you need a debt reduction strategy at all. After all, credit card companies provide minimum payment requirements on your monthly credit card statements, so why can’t you just use those?

Namely, minimum payments don’t work that way because a minimum payment schedule isn’t designed to get you out of debt quickly or efficiently. That schedule is how credit card companies make their money – interest charges are effectively the cost you pay to carry balances over from month to month.

Even creditors themselves will tell you that you need to pay off your debt faster in order to really use your credit cards effectively. In fact, thanks to the Credit CARD Act of 2009, your credit card statements carry a minimum payment warning that shows exactly how many years and how much you’ll pay in interest charges using minimum payments, as well as how much you can save by making a more reasonable fixed payment schedule.

Why it’s important to focus on one debt at a time

If you notice in both debt reduction strategies outlined in the video, your debt-reducing attention is always focused on one debt at a time while you make minimum payments on all of the others. The reason for this is efficiency and – in the case of the “tiger style” strategy – cost savings in interest charges.

By focusing your energy on one debt at a time, you give yourself the incentive you need to keep up with debt reduction – as you eliminate each debt it gives you motivation to keep going and take down the next one. If you have 10 credit cards, each with a $1,000 balance and try eliminating all of them at the same time with equal payments, it’s likely you’ll still be paying those 10 bills each month every month for the next few years until you’re finally debt free. It’s hard to keep up your strategy if you don’t have any real proof of your progress.

By contrast, if you focus on one debt, then you gradually start to cut one bill at a time. A few months in, you’re down to 9 bills, then 8 and so on. It’s motivating to get each debt paid off so you can build momentum.

You also avoid a situation where you wind up with an array of small debts all accruing interest charges individually. If you’re carrying balances on several different cards, that’s several different interest rates that are getting applied each month. Your debt ends up costing you more if you spread out your focus instead of devoting all your cash towards one debt at a time.

How long should debt reduction take?

The time it takes to eliminate debt really depends on how much debt you have and how much cash flow you can make available. However, a good rule of thumb is that you should be able to eliminate all of your debts in-full within five years (60 payments). If you can’t develop a strategy that can make that happen, then you need to find an alternate means of debt relief.

If you’re having trouble finding a way to make debt elimination work for you, call Consolidated Credit today at or complete an online application to request a confidential debt and budget analysis from a certified credit counselor. You can get an unbiased expert opinion on the best path out of debt in your situation at no charge so you have a better idea of how to move forward.