Paying Off Credit Cards Faster

The average American home owner has over $10,000 in unsecured credit card debt. These high interest credit cards are not tax deductible and cause financial stress on the credit card holder. There are ways to eliminate the financial stress and pay down your unsecured credit card debt faster.

You could consolidate your high interest credit card debt into a Home Equity Line of Credit. This way the interest you pay is tax deductable at the end of the year.

To pay off your credit cards much quicker and to receive benefits of tax deduction on the interest of your credit cards you can consolidate the credit card debt into your mortgage. This is called a cash-out mortgage refinance or a debt consolidation refinance. Consolidating your credit card debt into your mortgage can generally provide you with a much lower interest rate on this debt, save money from your minimum monthly payments, help you to possibly make this credit card debt now tax deductible through mortgage interest, and help to increase your credit scores. By paying off your credit card debt you will have a better ratio of credit card balances to credit card limits, which can significantly increase your credit scores.

Of course, any tax benefits you may be eligible for will also mean that those converted credit card balances will now be secured by your home, so consider your options carefully and consult your trusted mortgage expert to help you determine your best options.

If you are in a situation where you are unable to access the equity in your house, you have no equity in your house or you don't own a house and would like to be able to buy one, then here is a way to pay the credit cards off in a timely fashion.

Make a list of all your credit cards with balances. Put them in order of highest interest rate to lowest interest rate. Beside each card write down how much you have been paying each month and what the minimum payment is for each one. Write down the difference between the two payments. Apply this extra amount being paid on each card to the card with the highest interest rate until it is paid off. Then apply the amount that had been going towards that card to the next card on the list. Continue on down until all your credit cards are paid off.

A cash-out or debt consolidation are is a fast way to pay off your credit cards.

Once your credit card debt is paid off you will need to use self control and develop wise spending habits. The worst thing would be to work so hard to pay down your credit card debt only to charge it right back up again. Sadly this happens all to often to many homeowners.

After consolidating your credit cards remember to maintain several of them open. This allows the credit agencies to rate your credit on a monthly basis.

Remember that the way you manage your credit card balances affects your credit report. If you are not yet in a position to pay off credit cards through a home equity line or through refinancing, or if you are simply keeping your cards open afterwards, remember to carry a of no more than 50% of the account limit. This will help you maintain good credit scores.

Paying off credit cards faster is generally in your best interest, however speak with your mortgage professional prior to closing any credit card accounts which you have succeeded in paying off. Your mortgage company may be able to provide you with a credit simulation which will try to estimate the positive or negative impact of closing a paid off credit card account.

If you are unable to payoff your credit card debt short-term, consider asking your creditor for an increase in credit. By decreasing the ratio of your balance to the credit limit will be taken to account in most credit scoring models.

If your credit card balances are high, and you are considering bankruptcy, you should negotiate your credit balance with the card company. Usually they will waive some interest and fees to have a lump sum payment. You can also hire a debt consolidation company to do this for you.

If you can lower your total required monthly payments sufficiently by doing a cash out refinance on your home, yet continue to pay the same monthly amounts you have been, you can pay off credit cards more quickly.

One way to pay off cards faster without it affecting you too badly is to focus on paying down the smallest balance first. Then once that card is paid off you roll the payment you were paying in with the regular payment towards a different card. This allows you to payoff credit cards faster without coming up with additional monies.

Since credit card interest is accrued daily, paying your credit card bill early rather than the last day it is due, will reduce the amount of interest you pay as well!

» DISCLAIMER: The information contained in this article on 'Paying Off Credit Cards Faster' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.