Todd Christensen Profile Picture
Staff Writer at Debt Reduction Services

Create a plan to level pay to accelerate paying off credit card debt

Accelerate Credit Card Repayment

Without Sending More than This Month’s Minimum Amount Due

We all know that sending an extra payment or more than the minimum payment due will accelerate our credit card debt repayment. Many of us feel, though, that we don’t have any “extra” money sitting around to send to our creditors, so we continue sending only the minimum payment month-after-month.

Even if we never use our credit card again, making the minimum payment on our credit card accounts could take anywhere from 15 to 25 years to pay off.  I don’t know about you, but no movie, music or meal is good enough to warrant a 15-25 year repayment plan.

Here’s where the “Level Pay” principle comes into play:

Write down what the minimum payment on the account is this month and send off that amount to the creditor. However, when next month’s bill arrives, we’ll see that the minimum payment is slightly less (assuming we’ve cut up the card and not used it since). Instead of sending the slightly smaller minimum payment next month, we’ll send the same amount as we’re sending this month. And every month there after, we’ll send THIS month’s payment amount.

As a result, instead of finally paying off our credit card account two decades down the road, we’re more likely to be paid off in just five to six years (and we’ll have saved ourselves a lot of interest).

Level Pay vs. Minimum Payment

In a scenario of having a $5,000 balance at 16% interest, the level pay method pays off in 4 years 10 months versus the minimum payment method that doesn’t pay off for nearly 20 years. More importantly, using the level pay method means will pay just $2,250 in interest rather than $5,303 using the minimum payment method. That’s $3,053 we get to spend/save by year 20 that we would not have had otherwise.

So go for it! Level pay away, and let the debt repayment acceleration begin!

Todd Christensen

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