Credit card debt can sometimes get a chokehold on your finances before you realize it, and there will come a time when you decide it is time to take action and free yourself of debt. Paying off credit cards can seem overwhelming, especially with the high interest rates on some accounts. Organizing your debt and analyzing your specific situation will give you a clearer picture of how to best pay down those balances.

Budget Your Debt Elimination

Make a plan to eliminate your credit card debt. Make a personal budget, tracking where your money goes by keeping records of your income and expenses by category. Figure out where you can cut spending and get more cash freed up to pay toward your credit card balances. Write down the details of each credit card from your expenses column. Then rank them from highest balance to lowest and add the current interest rate you are being charged on the accounts. Once you have this information in front of you, you can decide which payoff method best suits you.

Interest Elimination Method

The best way to pay down your credit card debt is to begin paying as much as possible toward the account with the highest interest rate and continue paying the minimum monthly payment on the rest of the accounts until it is paid off, according to Bankrate.com. Take all of the money you were paying each month to the first credit card and add it to the minimum monthly payment of the next highest interest rate account until it is paid off. Continue using the money you paid to previous accounts on the next one until they are all eliminated.

Low Balance Method

The best method for one person may not be the best for another. Some people tend to get discouraged as they see the highest interest account shrink by tiny amounts despite best efforts. From a "dollars-and-sense" standpoint, the interest elimination method may be best, but if you get discouraged and quit before the task is done then it didn't help. Eliminating smaller accounts first may be the best for more impatient debtors. Give your motivation a boost by paying all the money you can afford in your budget toward the card with the smallest outstanding balance while paying the minimums on all the other accounts. This method is encouraging because you see an account disappear quickly, which will help you build momentum, according to Credit.com.

Consolidation

If multiple accounts keep you juggling funds to pay minimum balances on one card or another, the best approach to paying down the overall debt may be a consolidation. If you owe $10,000 spread out among six different credit cards with different due dates each month, you may find that using one of the cards to pay off all the others will make your debt reduction much simpler. Keep an eye on interest rates and try to consolidate your debt to the one with the lowest interest rate. Choose an amount you can afford to pay toward that card each month, preferably double or triple the minimum payment, and stick with the plan.

Source:

Bankrate: What Debt to Pay Off First

Credit.com: Tips for Paying Off Credit Card Deb