(Video): Credit Card Debt – The Dangers of Only Making the Minimum Payment

If you currently have credit card debt, then you certainly aren’t alone. But if you ever want to move on with your life and do really great financial things, then you have to get rid of the credit card debt. And whether you like it or not, making the minimum payments on your debts isn’t going to get the job done. Credit card debt happens when you choose to pay for things that you can’t pay cash for. Ideally, you’re able to spread the payments over several months and pay back the debt, but sadly, it often doesn’t work that way.

Watch my video below for more information.

 Minimum Payment =/= Staying Afloat

You will never get out of debt if you only pay the minimum payments. Many people think that paying the minimum payment is the equivalent of treading water. It’s not. It’s drowning. The moment that you take on debt, you must make a plan to pay it off. The plan can’t be to “pay whatever I’m told to pay.” That never works, especially when it comes to credit card debt.

How to Pay Off Credit Card Debt

You shouldn’t really start paying more than minimum payments on ALL of your credit cards. In fact, the best way to pay off debt is to list your debts from smallest balance to largest balance, pay minimum payments on all cards except the lowest balance, and then put all of your “extra” money towards that smallest balance. This is the absolute best way to pay off debt. You will pay off debt faster, and you will stay motivated to keep paying off debt.

So it’s simple. Make a list of all of your debts from smallest to largest. And get to work on the smallest debt. When that’s paid off, start focusing on the next smallest balance. You’ll be out of debt in no time, and you’ll be able to enjoy much more of your income.

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About Pete the Planner

I'm Peter Dunn, aka Pete the Planner and I'm an award-winning comedian and an award-winning financial mind. I released my first book, "What Your Dad Never Taught You About Budgeting" in 2006 and am the host of the popular radio show, "The Pete the Planner Show" on 93 WIBC FM. I am also the resident Fox59 News personal finance expert, appearing at 8:15 a.m. EST every Wednesday. I was the mastermind behind 24 Hour News 8’s "60 Days to Change" and have appeared regularly on Fox News, Fox Business, CNN Headline News and numerous nationally syndicated radio programs. Pete the Planner on Google+