How to Conquer Credit Card Debt
Credit cards are convenient, but carrying a balance from month to month can become incredibly expensive due to high Annual Percentage Rates (APRs). Our Credit Card Payoff Calculator helps you visualize exactly how much time and money it will take to become debt-free. If you're building a new home and need to estimate physical material costs while managing debt, check our Excavation Calculator.
The Danger of Minimum Payments
Credit card companies usually set minimum payments between 1% and 3% of your balance. If you only pay the minimum, the majority of your payment goes entirely toward interest, not the principal balance.
This is how credit card debt traps consumers for years or even decades. By using the Fixed Payment Goal tab above, you can find out exactly what fixed amount you need to pay to eradicate your debt on your own schedule.
Debt Payoff Strategies
If you have multiple credit cards, consider these two popular strategies:
- The Debt Avalanche: Focus all extra cash on the card with the highest interest rate first. This mathematically saves you the most money over time.
- The Debt Snowball: Focus all extra cash on the card with the smallest balance first. Paying off a card quickly provides a psychological "win" and builds momentum.