Dunn, NC CPA Business Tax, Individual Tax, Bookkeeping, Payroll CPA Firm Announces Credit Card Tips

Sept. 11, 2010 - PRLog -- If you’re like most Americans you have a credit card and use it on a regular basis.  After all, it’s pretty convenient to just pull out the card, swipe it and go on with the rest of your day!  Retail stores and credit card companies do a marvelous job training us to pay with plastic.  Many stores now have the card kiosks for customers to swipe their own cards.  College students are doled out credit card offers like candy at a parade.  And we’ve all seen the commercial where the person pulls out cash at the checkout counter to the ire of the clerk and credit card wielding customers in the checkout line.

The Facts

According to a recent Statistical Release on Consumer Credit issued by the Federal Reserve americans collectively owed $826.5 billion dollars in revolving consumer debt as of June 30, 2010.  That’s about $8,000 per household.  If you throw in the average interest rate of 11% it can take awhile to pay that much off – even with a good plan.

The Plan

1)  The first step is to stop the bleeding by not using credit cards going forward thereby removing the possibility of increasing the balances.  Use existing cash (or your debit card) instead.  If you can’t afford to pay cash for an item don’t buy it.

2)  Next, list all of your credit cards in order with the account having the highest interest rate you are paying first and the lowest rate you are paying last.  Write the corresponding balance and minimum payment requirement beside the interest rate for each account as well.

3)  Total all of the monthly minimum payments on your list.  You will pay at least this much each month until all accounts are paid off.  Even though the required minimum payment requirements decrease as you pay the balances down, continue to pay the same amount each month.

4)  Any additional funds you can devote to payments above the original minimum  payment requirements, including unexpected income you receive, should be applied to the account at the top of your list (with the highest interest rate).  

5)  As you pay off accounts with lower balances continue to pay the total of your original minimum payment requirement (from your list) towards the outstanding balances.  Continue to shift any excess funds to the account with the highest interest rate.

Following this plan closely will have you out of debt in no time!

Matthew A. Smith, CPA is a tax partner in the Dunn, NC office of Todd Rivenbark & Puryear, PLLC and can be reached at matthew@trpcpa.com or (910) 891-1100 x2215.

For more information visit:  http://www.trpcpa.com

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Todd Rivenbark & Puryear, PLLC is a Certifed Public Accounting firm providing tax preparation, financial statements, audits, bookkeeping, payroll, estate planning, and other services to closely-held businesses and individuals in central and eastern NC.