Are you someone who is neck-deep in debt and has no clue as to how to Pay off Credit Card Debt? Do you spend more on paying debt interest rather than on your needs? Stop worrying, as you are not the only one. As per Experian’s seventh annual State of Credit Report, the average debt per consumer is $39, 216. It might seem a difficult task to pay off your debts, but it can happen by just following a few simple steps.
- 1 How to Pay off Credit Card Debt
- 2 Conclusion
How to Pay off Credit Card Debt
Today, we will show you how it is possible to unload your tension by paying off those massive Credit Card Debts, which come with sky-high interest rates.
Constructing a plan
The first and foremost step is to organize yourself. You have to make a plan as to how you can pay off debts off all those credit cards. Without a plan, you will just remain confused, and interests will keep on increasing. So, take a pen and paper and analyze your current position. Start by finding out the number of your debts and interest rates charged on them. Get answers to questions like Do you have several small debts or several large debts.
Once you have found out all the information regarding your debts, now see how much minimum amount you have to pay to stay current on your credit card bills. Next, look at your budget and find out whether or not you can allocate some extra money on any debt. If you can, do it. This will help you Pay off Credit Card Debt effectively and efficiently.
Pay off Credit Card Debt using Avalanche Method.
One way you can pay off your debt in an organized way is through Avalanche Method. Through this method, you can pay off your debts in order of highest interest rates to lowest interest rates. Pay off the one with the most significant interest rates as quickly as possible. This does not mean that you should stop paying off monthly balances on other credit cards. You have to pay a minimum amount for every debt. However, spend some extra amount along with the minimum amount on balance with the Highest Interest Rates. For, E.g., If you pay 200$ every month for one account, then add $80 to it, bringing a total to $280. This will help you to reduce the interest charged on that particular credit card.
Pay off Credit Card Debt Using the Snowball Method.
When you attempt your question paper, you try to follow a particular pattern. You attempt the easiest questions first and save the most difficult ones for the last. You can follow the same pattern to Pay off Credit Card Debt. Popularly known as the Snowball Method, start by paying off lowest debt balances. This can be done by paying extra amounts in addition to the minimum amount you pay on the lowest debt balances. This will help finish off the debts with the lowest balances, and now you can focus on paying off debts with higher balances.
Liquidate valuable possessions
This might not be the favorite way to Pay off Credit Card Debt, but you have to do it if your earnings are less than the amount you have to pay monthly to settle your account. If you avoid paying the amount every month, the interests will keep on piling up until you are neck-deep in debt. Thus, you can sell or pawn some personal items like your car, a gold chain, some antique item, or anything worth some value, which will satisfy your credit card companies. On the bright side, if you sell a personal item like a car to finish off your credit card debt, you can earn money again to purchase it once you are free from debt.
Reducing your Expenses
If you want to Pay off Credit Card Debt, you have to stop spending money on unnecessary items. Your Credit Card Bill will never pay off if you keep on piling bills on the card. Thus, for some time, put unnecessary expenses on hold and purchase supplies, which are essential for daily life. Here are some suggestions that will aid you to save money:
- Avoid using a car and save money on petrol by using Public Transport.
- Reduce expenses on Entertainment like visiting bars and restaurants and subscriptions like Netflix.
- Avoid spending money on takeout food and eat home cook food. This will also keep you healthy.
Combining debt to one Single Card
If you have mortgages on greater than one credit card, it can become difficult as well as confusing paying off accounts twice or thrice every month. Thus, you can apply for transferring all your debts to one single place. This will ultimately help you in more than one way. For one, you will now make one single payment for all credit cards.
Next, many balance transfer Credit Cards come with the incentive of zero-interest for the first month. This will give you enough time to pay off any outstanding balances of previous months. Thus combining the debts of different credit cards might be helpful to Pay off Credit Card Debt.
Visiting your Credit Card Company
If you are stuck, neck-deep in debt and find, the above methods do not help you, try going for this tip. You can give a visit to your credit card company and explain your financial situation to them. If you have been associated with them for a long period, tell them. Many companies try to keep their customers happy and satisfied and might understand your problem. If they consider your problem genuine, they might reduce interest on your bills for some time or ignore the late fee balances. This method entirely depends on your communication skills and your relations with the credit card company.
Well, I hope that the ways as mentioned earlier will help you to Pay off Credit Card Debt. These methods are more than sufficient to get you on track to pay off your bills and free yourself from the stress which debt causes. If you liked the post, share it with others to help them too.
See also: 8 Best Business Credit Cards in 2019