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How to pay off $50,000 in debt faster

Moving balances from one credit card to another and taking advantage of interest-only payment options can be financially damaging to people throughout Ohio. As the length of time it takes to pay a debt back extends, the overall interest charges will continue to grow. Paying the minimum due on credit accounts is ineffective because the amount consumers are required to pay each month falls along with the balance owed. The result is that it can take decades to wind up paying off the debts if people rely solely on minimum payments.

This is clearly illustrated in the example of $50,000 in debt at 24 percent interest. The current minimum payment on this type of debt would be about $1,500, but the minimum would decrease by roughly $15 a month. At this rate, the consumer would wind up taking 42 years to pay the debt in full. However, the balance would be paid in full in less than five years if the consumer continued making the $1,500 payment regardless of how low the minimum amount due might be.

Another important thing to remember is that becoming debt-free is not the only worthy goal. Consumers must also make a commitment to put money in savings and exert greater control over spending. Ideally, any raises, tax refunds or other increases in income should be split between savings and paying down debt. Half of the proceeds should go directly into an emergency savings account, and the other half should be used to get ahead on the credit card and revolving debts.

In some cases, filing bankruptcy may prove to the best choice for those who are legitimately unable to pay off their obligations. Chapter 7 bankruptcy can result in the discharge of certain unsecured debt, but there are restrictions and conditions that a bankruptcy attorney can explain.

Source: FOX Business, "Fastest Way to Pay Down $50K Credit Card Debt", Steve Bucci, July 31, 2014

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