Wanda Wilkinson

Now that Christmas is over, it’s time to focus on paying off Holiday debt.  High balances and finance charges can be a burden and actually limit financial opportunities by keeping your credit scores lower than they should be.  Remember, debt utilization accounts for 30% of your credit score.  By running up high balances on your credit cards, you may be hurting your credit more than you think…
 

Take action to start paying credit card balances down. 
 

Step one:  Get organized.  Gather all credit card information, making note of balances, interest rates, due dates, and minimum payments for each card.
 

Step two:  Choose a payment plan. 
 

1.      Pay off the balance with the highest APR first.  From a financial view, this strategy makes the most sense.  Increase your minimum monthly payment on the credit card with the highest annual percentage rate while continuing to make the minimum monthly payment on the rest of the cards.  Once you pay this card to a zero balance, move on to the card with the next highest annual percentage rate and so on.  This strategy will save you money on interest.
 

2.      Pay off the credit card with the lowest balance first.  This strategy is a great way to build momentum.  Increase your minimum payment on the card with the lowest balance while continuing to make the minimum payment on the rest of the cards.  You will begin to pay off credit cards quicker this way, which will provide you with a feeling of accomplishment.
 

3.      Consolidate your debt to a single card.  Choose the card with the lowest APR and transfer all balances to that card.  This will eliminate several monthly payments and make keeping track of your debt easier.  It will also save money on interest payments by choosing the card with the lowest APR.
 

Step three:  Stop charging.  Whatever pay-down strategy you choose, stick with it and stop making additional purchases with credit.  Use cash or a debit card to make purchases until you reach your goal of paying off credit card debt.  By focusing on paying down revolving debt, you will begin to see your credit scores improve!
 

Make a New Year’s resolution to help your friends and family members improve their credit by referring them to me.  I can work with them now and provide them with knowledge and education that will help them build credit and improve credit scores into the future.  Let’s make 2010 a prosperous year together.