How To Pay Off Your Credit Cards

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* If minimum payment is 2% of balance.

Thirty years to pay off $8,000 in junk you charged on your credit card?!!! And that's only at 16 percent which you would be lucky to get. Most Americans with that much debt are paying 18 to 30 percent APR.

The above illustration is a great example of how Step #6 is the most important step in paying off your credit cards. Realize that steps 1 through 5 were just the tools to prepare you for step #6. Steps 1 to 5 is the ammunition, and Step #6 is the bazooka by which you blast away your credit card debt. You have got to make significantly larger than the minimum payments to get out debt or you will not succeed.

In Step 6 we advise you to go after your largest interest rate credit card with at least double or triple the minimum payments. (If you follow steps 1 through 5 this should be easier than it sounds). However, it's also important to take little steps against your other credit cards which is why you should add just $5 or $10 or $20 extra to the minimum monthly payment on your other credit cards. While this does not sound like much, this little bit will add up as you are beating down the credit card with the higher interest rate with big payments = AT THE SAME TIME. By the time that high APR credit card is paid off, you will be surprised to see how much lower the balance is on those other credit cards as that extra $5, $10 or $20 is applied against the principal. And that's the important point we are trying to make here: paying just the minimum payment due can keep you in debt to your credit cards for 15, 25, 30 and even 40 years. Therefore, you have to go after the principal debt with larger than the minimum monthly payments.

Now, fast forward several years to the point when you have paid off that high interest credit card. When that day comes, take the $200 or $300 payments you were making, and roll them over to your other credit cards. Thanks to the extra $5 to $20 payments you were making, you'll find your balances significantly lower and the extra $200 to $300 will cause your credit card debt to do a REVERSE SNOWBALL. What is a reverse snowball? Well, have you ever noticed how debt seems to snowball, like when you miss a payment in Step #5? The snowball starts out at the top of the hills, and as it rolls down, it gets bigger and bigger and bigger?

The opposite is true when you start to pay down your debt. In the beginning, it will be really slow going and seem impossible. But it is a law of economical physics that as you pay down your debt, over time, it will get easier and easier as your balances due get smaller and smaller. So it's important to remember that when you pay off that first credit card, take those large monthly payments you were making and apply them towards the other credit cards. Don't shrink the payments as a "reward to yourself." - Honestly, you don't deserve a reward for yourself until all credit card debt is paid off.

STEP #7. Do the Credit Card Dance: Nearly all personal finance experts will advise you to try and negotiate with your credit card company for lower interest rates. Wow. They make it sound so easy but if you have ever tried it, it's very, very, very difficult and much easier said than done.

Jean Chatzky, one of the personal finance experts who guest starred on Oprah's Debt Diet series, and author of two personal finance books: Pay It Down and You Don't Have to Be Rich offers what amounts to the best advice for negotiating for lower interest rates. Click here to read Chatzky's Script to Renegotiate your interest rates. Be sure to print it out and have it close by when you make that telephone call.

Other personal financial experts believe that you should transfer your high interest rate credit cards over to another credit card that is offering an INTRODUCTORY LOW APR of 5.9 or 6.9 percent. The "introductory period" on these cards usually last from 6 to 12 months. While BadCreditService.com agrees that it is a good idea to take advantage of these offers when paying off a credit card, - You Have to Be Extremely Careful when doing the credit card dance.

Here's why.

• While most financial experts tell you to trade in your high interest rate credit card for a lower one, they forget to stress how important it is to CANCEL your previous high interest credit card. This sounds like a no brainer but many people either forget to do this, or purposely neglect to do this because they have a shopping addiction mentioned in Step #1 and Step #10. Trading credit cards from high interest to low interest ONLY WORKS IF YOU CANCLE THE PREVIOUS CREDIT CARD!!