Credit card debt can really drag you down

Credit card debt is the worst kind you can have. Not only do you usually have a higher interest rate on the card than you would have say on a mortgage. If you carry a balance on your card this is a good indication that you are overspending on a regular basis.

Credit card debt is the worst kind you can have.

Not only do you usually have a higher interest rate on the card than you would have say on a mortgage. If you carry a balance on your card this is a good indication that you are overspending on a regular basis.

Often people do not realize the scope of the debt they owe when they only consider the minimum payment amount on their cards. Check out this example: $2,500 on a card with a 12 per cent annual interest rate and you are paying only the two per cent minimum. It will take you more than 19 years to pay this off. You will end up paying $2, 200 in interest alone over those years that is almost the same amount you had on the card in the first place. So how to go about paying off those cards

There are a lot of ways to prioritize credit card debt repayments. This is an example of one method. The DOLP (dead on last payment) system by David Bach, which is found in his book Start Late Finish Rich does it like this.

First make a list of the balances on all your credit cards. Do not forget any in store cards or accounts you have. Second, divide each balance by the minimum payment. The result is the cards DOLP number. For example; Say you have a Visa with a $500 balance and the minimum payment is $50. The DOLP number for that card would be 10.

Once you have the DOLP number for all your accounts rank them in reverse order. Put the account with the lowest DOLP number first on the list. Then the one with the second lowest number and so on. This shows you the most efficient way in which to pay off your various credit card balances.

Now what you do from here is to pay the minimum on all your cards. But on the one with the lowest DOLP number make the minimum and whatever else you can afford to pay. If you receive any bonus money during the year put that towards your debt as well. Now once you have DOLPed your first account (that is paid it off entirely). Take that minimum payment and add it to the minimum payment due on the second credit card in your list. Continuing to pay any extra you can. Keep on doing this until you have succeeded in DOLPing all your credit card accounts. Once you have paid off the credit cards. Take a good look at them. Pick the one with the lowest interest rate. Make sure this is a card that can be used all over and keep it for emergencies only. A car repair bill when you are out of town and you don’t have the money to spare in your bank account is an emergency. A great shoe sale at the mall is not. As for the rest of the cards cancel them, nobody needs the temptation.

Once you are free of credit card debt take this money and apply it to your mortgage, car payment or put it in a savings account.

Sandra Nolan is a freelance writer from Rocky Mountain House. Her column will appear every other week in LIFE. Contact her at

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