1. Find out where you stand. It's important that you know exactly how much total debt you have before you can formulate a plan to eliminate that debt. Don't forget to include any consumer debt lines you may have that never actually issued you a physical card.
2. Go through each of your cards/credit lines and put them in descending order by interest rate. The biggest reason banks are so happy to give out credit cards is because they make such incredibly high rates of interest.
3. Now that you know which cards carry the highest interest rate, it's time to see if you can change the order. What a lot of people don't know is that a simple phone call to the credit card issuer can immediately lower your interest rate. Call each one of the issuers and ask for a rate decrease. If they deny your request, ask for a supervisor, and request it again. You'll be surprised how many times this will work.
4. Re-order your list, in the same descending order.
5. Take note of any special interest rates or promotions that may be expiring soon. If you have a card with 0% interest, it will be at the bottom of your list right now, but if it changes in a month, it may be the highest on the list relatively soon.
6. Make a second list - this one is a list of your total balance on each card. You'll want to do this in descending order as well.
7. One more list. This will require a little math. Take the total balance on each card, and divide it by the total credit limit on the card. This will give you what is known as the "debt-to-limit" percentage. This list will be descending, with the highest percentage at the top of the list.
8. At this point, you have three lists. Each list will most likely be in a slightly different order. This step requires a decision to be made. Is your primary goal to 1) eliminate debt quickly, 2) pay as little interest as possible, or 3) improve your credit score?
9. If you want to eliminate debt fast, you should pay minimum balances on all the cards but the top 1 in each of the first 2 lists (obviously while avoiding buying anything new). If you want to pay as little interest as possible, pay as much as possible on the top card on the first list. If you want your credit to improve, you should pay off the cards in the order of the third list we made.
10. Keep at it! If you don't rack up new debt, and continue paying down your cards in the order of the lists we made, you'll be amazed how fast you can get the credit card "monkeys" off your back.
Finally, credit is not a bad thing, but you need to be careful when you are looking at getting a new credit card. Do a first.
