If you are just paying minimum payments on your credit card balances, you should think about an alternative! For example, if you owe $10,000 on a credit card charging you just 18% annual interest, and you are paying the minimum payment of $250 per month, it will take you 28 years to pay off this debt, and a total of over $14,000! You should figure out another way.

What options do you have?

Well, I recommend that you pay off your highest interest cards first. These days there are actually credit card companies charging 30% annual interest. Attack these cards first. I suggest you make a list of all your credit cards, use a spreadsheet if you like, or just make a list. The highest interest rate cards at the top of the list! And then the next highest rate and so on. Attack the highest interest rate cards first. Make double triple or more payments on that one, while you maintain minimum payments are the lower interest rate ones.

Or, what else can you do? Well, another option would be to take out a consolidation loan, and pay off your high interest credit card debts. But be careful with this option. I see too many people who take out a loan to pay off their debts, and then run up the credit card debts again! Try to live without using credit! The goal is to have only 1 or 2 cards, and a low utilization rate, say of 30% of the credit line or less! That is how you can keep your score up. But most important is to stop using credit to finance a lifestyle you cannot afford.

Did you know that when credit cards were first created, the idea was to pay off the balance each month, and not ever have a running balance. They were created for convenience and safety, so you didn’t have to carry around any cash. But credit card companies realized very soon after that they could make lots of money by letting people keep a running balance. It is human nature to spend more money than we have, isn’t it? We want. Think of all those advertisers telling us to buy now! We need this or that thing to make us feel good! STOP! Don’t let them manipulate you! Rich people do not pay interest! If I want that beautiful shirt I just saw advertised at $100. Why pay $130 for it over time? Better to SAVE up the money and buy it when I have $100!

Another option may be bankruptcy. I would rather see you file a bankruptcy than to use your 401k or IRA savings to pay credit card debts! If you cannot come up with a plan to pay your debts over a reasonable amount of time, say three to five years, I personally think bankruptcy may be your best option. Will your income be increasing over the next three to five years? Can you make more than minimum payments so you will be out of debt within a reasonable time frame? How much savings do you have? How old are you? Have you accumulated any savings for retirement years? These are the questions you need to think about. No one wants to file bankruptcy, but if you are brutally honest with yourself, can you come up with a plan to substantially reduce your debt, even eliminate your debts in a reasonable time period?

See for yourself. Here is a link to a credit card calculator on bankrate.com: