If you have multiple numbers of unpaid credit bills and want to get out of this tight financial situation, you need to take some initiative to eliminate your credit card debt in a shorter time.

Methods to reduce credit card debts

You can start to pay off your credit card debt by applying any one of the methods mentioned below:

Snowball method: This method to reduce credit card debt was popularized by Dave Ramsey. In this method you have to list your debts in such a manner that, the bill having the smallest balance will be at the top and the bill having highest balance will be at the bottom. You need to make minimum payment to all your bills except the one with the smallest balance. In addition to the minimum amount, you need to pay as much as you can towards the debt having smallest balance, till it is fully paid off. Once it is paid off, you have to repeat the process with the next bill having the smallest balance.

The pros and cons of this method are:

Pros:

1. You will get mental satisfaction as you can pay off an entire account quickly

2. This method is easy to set up and follow

3. This method helps to eliminate your smaller account balances in a short time

Cons:

1. This is not a mathematically sound method

2. Your debts with higher balances will be costing you much more than your lower ones

Snowflake method: In this method you need to save small earnings and make a small extra payment, after making the minimum payment to each account. You can earn extra money by doing extra jobs, having a garage sale, etc.

Avalanche method: This method was popularized by blogger, Flexo, and has been implemented over years, by many financial planners. In this method you have to make a list of your credit bills, putting the bill with highest interest rate at the top and the lowest interest rate at the bottom. You start to tackle the debt with the highest interest first. After making the minimum payment to all your debts, you make an extra payment to the bill which is at the top. When the first bill is fully paid off, you need to do the same things with the second, and this process will go on until you have completely paid off your debts.

The pros and cons of this method are:

Pros:

1. This method minimizes the amount paid in interest

2. This method is easy to plan and follow

3. It is mathematically most efficient

Cons:

1. This method does not differentiate between unsecured and secured debts

2. To have a large balance on top of your list can be discouraging to you

3. It focuses mainly on one debt at a time, this may discourage you

In order to get out of credit card debt, you can follow any of the three methods mentioned above, after choosing the one that will be the best for you.

Getting out of credit card should be a vital part of planning for retirement.