Which Card To Pay Off First

The calculator will also tell you how much you'll save on interest if you pay just a little bit more each month on your highest rate cards. For example, let's say you have balances of $3,000 on an 18.9% card and $4,000 at 17.5% -- if you put an additional $25 faithfully toward the highest interest debt, you'll save $2,416 in interest and roll down your balances to zero in 2 years and 5 months, instead of 11 years and 8 months!

There's another school of thought, however -- that you should pay off your lowest balance first -- just to give you the boost of erasing one of your balances more quickly. Run the numbers through the calculator to find out how that would affect your savings. For example, if you had a balance of $3,000 on an 18.9% card and $1,000 at 17.5%--and put that extra $25 toward the lower balance-you'd only wind up paying $8 more in interest to retire that balance first. It might be well worth that small amount to see at least one zero balance a little sooner!

In the end, the goal is to reduce your debt to no more than 10% of your credit line on any single credit card. Like diets, one size doesn't fit all-choose whatever plan you can stick to until the debt is gone.

Negotiating A Lower Interest Rate

It's not an automatic but sometimes it is possible to lower your rate if you're a loyal customer with an excellent payment record (another good reason to meet those due dates). It's a lot more expensive for a card issuing company to find a new customer than to keep you, and more often than not, cardholders are successful in getting a 21% or 18% rate lowered to 15% or 11%.

Pick a card you've held for at least two years. You want to be able to make the case that you value the card and want to keep it.  Then call the customer service number. Write down the name of the person you speak with.

Be persistent but polite. Mention that you're receiving offers with much better rates from other companies and you're thinking of moving your business elsewhere. At the same time, mention that you would much rather stay with a card you know. Ask what's the best rate they can offer.

If the customer service rep can't help, ask to speak to a supervisor or manager. For more information on credit cards, read: "Credit Education" at: http://www.myfico.com/.