Credit Card Payment Plans

Posted by admin on Feb 7, 2011 in Blog, Debt Free | 3 comments

If you are looking for an accelerated payment plan to get rid of your credit card debt then you can try this approach.  This website is dedicated to help consumers eliminate unmanageable debt.  This option, however, advises you how to pay off 100% of your debt over time with minimum damage to your credit history.  If your finances are tight but workable and you are not yet drowning in debt and bankruptcy is not staring you in the eye, then this option could work for you.   Not to lecture you but if you have the ability to pay your bills you should do so.  We believe in personal responsibilities, and the debt settlement program is really only for those who are overwhelmed with debt and have limited debt elimination options.

This credit card Payment Plan works by being able to total up your credit card debts and the minimum monthly payments required to keep your accounts current.  For example, a debt of $25,000.00 and a total minimum payment of $750.00 on all credit cards.  For this payment plan to work, you need an additional 20% to be applied to your minimum payments.  This comes out to be an extra $150.00 per month you need to put towards your credit card debt.

Now put your credit cards in order with the lowest principle amount first and the highest last.  Make the minimum payments on all cards except the first card, which will get the minimum plus the extra 20% or $150.00 as shown in our sample.  Keep applying this accelerated payment to the first card until it is paid off.  Then apply the extra $150.00 to the second card and so on until all your cards have a zero balance.

Another way to work this plan is to list your cards by interest rates with the highest being attacked first and so on.  Our experience is to get some early successes and enjoy paying off a card then working on the next.  It is a great motivation to be able to remove one credit card and then two credit cards from your list.

For this approach to work, you must be confident that your budget can handle this extra 20% each and every month.  If making the minimums each month is difficult, then this plan is probably not for you.  However, if you think you can make it work by saving money in one area or increasing your income somehow, then this approach could be a great way to pay off all your debt in a more manageable time period without severe damage to your credit.

Note.  A recent ruling by the federal government encourages credit card companies to increase minimum payments up to 4% so that their creditors can pay off their debts faster.

In theory it is a good idea but if you were having a difficult time paying your minimums at 2 or 2.5% this ruling will make it even more difficult and lessen the chance that this payment plan can work for you.