Credit Card Amortization

Posted by: Sophie H. | Apr 30,2008


Ever hear of amortization?  It’s one of those big words used in debt circles that simply means decreasing an amount over time.  So debt amortization is just a fancier way of saying debt reduction.  But it can be much more fruitful to begin an amortization plan then to just say, “I’m going to start reducing my debts.”  Debt amortization is a detailed process that can more effectively reduce your debt – credit card or otherwise- over time.  

Debt amortization is like creating a business plan for your debt management strategy.  It involves using an amortization calculator to determine how much you will owe due to interest and how soon you can pay off the debt using varying payment strategies. It also involves amortization analysis, which takes into account what you have accomplished over a specific time frame and how that compares to your projections.  

What makes amortization complicated is if you have several different debts at once, as most do.  If you’re trying to amortize your mortgage, student loan, car loan, and credit card debt at once, it can be difficult.  The money you spend on one loan will take away money you can put towards another.  This is what makes amortization so important.  It takes into account your entire portfolio.  Budgeting is a good first step, but until you determine a long term plan about how you’re going to pay off varying debts, and when this will come to fruition, you will only have half the story.  

Be certain, this is no easy task.  One of the reasons for meeting with a debt counselor is because sometimes it takes a professional’s advice and instruction for setting up a long term amortization plan.  Even though debt counselors are sometimes known for renegotiating current debt with your creditors, this is not always the case.  A debt counselor may just act as an accountant who will help you devise the best strategy to tackle your debt in the short and long term.  

If you don’t want to go the route of hiring a debt counselor, then use our many calculators to determine how much you owe for certain debts and how long it will take to pay these debts off.  In three to six months time, use these calculators again to see how you’re faring.  It’s by no means an easy process, but amortization calculators can make the process much easier.  

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