One of these methods is sometime referred to a "debt snowball." I've also heard it called a "debt ladder." Regardless of what you call it, this method is highly effective for paying off debt. It can be used with regards to all of your debts, but for now, we will just look at your credit cards.
The very first step is to prepare to make a list. You will access to your most recent credit card statements. Write down the name of the credit card, the balance, the percentage of interest that you are paying on it, and the minimum payment. Do this for each card.
Next, reorder your list. The first card you should list is the one with the highest percentage rate. The one with the lowest percentage rate should be the last one on your list. Your list might look something like this:
- Department Store Card--$550--19.99%-----payment: $25
- Airline Credit Card-----$4500--14.90%-----payment: $75
- Credit Union Visa------$3300----7.90%-----payment: $70
- Use all bonuses and tax refunds to pay off credit card debt. I know this is harsh, but if you have credit card debt, you have somehow lived beyond your means, and you need to wipe the slate clean as quickly as possible.
- Transfer balances to lower interest rate cards. Calculate carefully. Most of the time there is a fee for a balance transfer. It may not really be worth transferring a balance to a lower rate if the fee is too high. Also, this is not a green light to go a head and open more credit cards all willy nilly. More credit cards can get you in trouble if you aren't very calculated and very careful, however; if used carefully, and researched well, doing a balance transfer could greatly speed things up. I have used this method successfully, and it has saved me time and money.