Military and credit card debt

Asked September 3, 2013, 8:23 PM EDT

A service member has a lot of credit card debt. What should he do to pay these balances off?

Wake County North Carolina

1 Response

To start paying off debt, the first thing a service member should do is call the credit card company to see if it will lower the interest rate. The next thing to do is organize all of the debt. Ensure that the service member makes at least the minimum payment on each credit card, and make sure that payments are being made on time. If the service member has extra money left over, advise him or her to take that money and put it toward the credit card with the highest interest rate first. When the debt with the highest interest rate is paid off, move on to the next debt with the higher interest rate. This will save a lot of money in interest down the line.For more information about how to accelerate debt repayment, refer to PowerPay is a free program developed by Utah State University Cooperative Extension to help consumers get out of debt faster and save money on interest payments. Users enter the names of their creditors and the amount owed, interest rate, and monthly payment. The program provides a repayment calendar that adds monthly payments from paid-off debts to remaining debts, often resulting in hundreds, even thousands, of dollars of interest savings. There are several repayment options such as starting with the highest interest debts or those with the lowest balance or shortest repayment time. There is also a feature to incorporate lump-sum payments, such as tax refunds, into the analysis and to adjust for changing interest rates on credit cards.