People in this country are suffering under huge debt. Nearly everyone has at least one credit card and most have multiple credit cards. Moreover, in tough economic times many are only paying the minimum.

As everyone knows that plan will take you, no where on the path to debt elimination. You will simply sit and spin your wheels hoping that you win the lottery so you can pay off these balances. What if there was a better way?

There is a plan that will help you pay down then pay off all your credit cards! Think about it, you taking control of your financial future. This simple plan is like a credit card snowball effect.

You know what that is, right? Just like a snowball, you roll up in the backyard, credit cards will build up a balance seemingly in moments. As a consumer, you have two choices, get smashed by the credit card snowball effect or turn it around and make it work for you.

Snowballing your credit card balance to achieve debt elimination is not difficult. You take a little each month and add to what you are already paying. You take the balance down faster and therefore the interest you pay, which in turn grows the amount of your next payment that goes toward principle, this is the credit card snowball effect.

Debt elimination becomes more and more difficult when you carry balances on your credit card. The credit card snowball effect in the negative is a compilation of compound interest. Therefore, the idea is to use this same effect to your advantage.

Write down all your cards.

Choose the one with the highest interest rate

Add extra money each month to the card with the highest rate until it is paid off.

Do this over again for each succeeding credit card until you have eliminated them all.

Sounds like good advice doesn’t it? On the surface, this is a great debt elimination exercise and eventually it will work. However there are times and situation where this is not the correct way to reverse the credit card snowball effect.

Interest rates will vary from one card to the next. Some will be extremely high and some will have lower introductory rates. All things being equal paying off the highest interest rate would sound reasonable, nevertheless consider the example below.

For the sake of argument, lets say that you have two cards with different interest rates. Let us further assume that the interest rates are ten and twenty percent respectively. Choosing which one to pay will depend on the balance on each. If your 10% card is caring a large balance then your monthly interest accrual will be higher than the larger interest rate.

The above example just goes to show that higher interest is not always the enemy of your debt elimination. The credit card snowball effect will quickly take your balance to new heights. Particularly if you are only making the minimum, payment required.

Let’s take another look of how to use the credit card snowball effect to your advantage:

Create a list of all your credit cards and their rates.

Start with the one that accrues the highest interest every month.

Begin concentrating all the extra money you can toward that credit card.

Pay the minimum on others until the card with the highest interest accrual is at zero.

Rinse, lather and repeat for all the cards in your wallet.

Sometimes a debt elimination plan means looking at things with a new perspective. This way of using the credit card snowball effect will have you free of your debt woes in no time.

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