Credit Card Debt

[SunnyCee]

Recently I've spent some money moving away from home and I recieved a surprising bill out of the blue, and I've incurred some debt on my credit card. Not more than $1,000 but enough for me to worry about. I know I can pay little by little, each month, but it still worries me.

How bad, or unusual, is this really? I know that's how the cards make their money, but as long as I pay something on time, it's can't be too terrible, right? (scared smile). Also, when I do pay it off completely, will this debt still show on future credit reports?

Obviously I need to learn more about managing money...

[red]

just make sure you pay it on time every month and it's fine as far as your credit report is concerned. i got into some debt after i graduated college, and it didn't take me long to pay it off. learned my lesson and now i have a big savings account in case of emergencies so i don't have to rely on credit cards.

[LaFille]

Recently I've spent some money moving away from home and I recieved a surprising bill out of the blue, and I've incurred some debt on my credit card. Not more than $1,000 but enough for me to worry about. I know I can pay little by little, each month, but it still worries me.

How bad, or unusual, is this really? I know that's how the cards make their money, but as long as I pay something on time, it's can't be too terrible, right? (scared smile). Also, when I do pay it off completely, will this debt still show on future credit reports?

Obviously I need to learn more about managing money...

that's not too bad at all... especially since you plan on paying it off right away and not just adding to the debt. whatever you do, pay more than the minimum each month... even if it's just 5 or 10 dollars over, because those monthly payments are calculated with a formula designed to keep you in debt as long as possible, therefore paying the maximum amount of interest. also, you can call your credit card company and ask them to lower your interest rate and they often will... strangely enough.

[jrwilheim]

Is the debt on one card or multiple cards? If it's on one card, just pay it off slowly, paying more than the minimum each time as other posters have said.

If the debt is spread out over multiple cards, however, you have to be smart in how you tackle it. Suze Orman and other financial experts recommend the debt snowball method, which works as follows:

1) Add up the minimum payments on all of your cards.

2) Figure out how much you could spend each month above this amount making payments on your cards.

3) Rank your cards by interest rate (NOT by amount of debt on card). For instance, if Card A has a rate of 19%, but Card B has a rate of 15% and card C has 14%, make paying off Card A your priority, even if you owe less on Card A than on Card B or Card C.

4) Each month, pay the minimum on each card. Put whatever you have determined you can spend above the minimum payments toward the card with the highest interest rate.

5) When you have paid off the card with the highest rate, apply the amount you were spending each month paying the minimum on that card, plus whatever extra amount you determined you could spend on credit card payments, toward the card with the second-highest rate, until it's paid off.

6) Repeat step 5 as needed until all cards are paid off.

Once your credit cards are paid off, the debts will no longer appear on your credit report. Credit reports will show two things to a potential creditor:

1) Whether you've ever been late on a payment.

2) How much of your available credit lines you're using. Generally, the lower the better--for instance, if you could charge up to $10,000 on all your cards combined, it's better to have charged $1000 than to have charged $5000. This does affect your credit score.