It’s become a fantasy, this idea of erasing your credit card debt. You dream about it and allow yourself to feel how sweet it would be. Well, newsflash: it is possible!
Here are some tips for paying off credit card debt.
Get Rid of That High-Balance Card First
With this approach, you’ll pay off the plastic with the highest interest rate while continuing to make minimum payments on your other cards. After you’ve done that, you’ll tackle the one with the next-highest rate and continue until you’ve reached your goal.
To make this happen, put every extra dollar you have on the card you wish to pay off. Pick an amount that you can manage and stay with it. For example, if you begin by shelling out an extra $150 on that card, keep paying at least that each month until the debt is cleared.
After the first account is paid off, the extra $150 will then be applied to the next card. This “snowball” method works like this: say you have three cards that carry minimum payments of $50, $30 and $20. You pay $200 monthly on the first card and make minimum payments on the others. The $200 is the $50 minimum payment plus the extra $150.
When you’re done with that card, begin putting that extra $200 on the next card. That’ll bring your monthly payments to $230. When you get to the third card, you’ll be paying $250 monthly.
Ultimately, you’ll pay your debts off much faster than you would by making minimum payments.
Erase the Lowest Balance First
Other tips for paying off credit card debt include eliminating your lowest balance first. This approach works well for those who could use the psychological boost and momentum that accompanies accomplishment. It calls for you to pay more on the plastic with the smallest balance while continuing to make minimum outlays on your other cards. After you’ve paid off the card with the lowest balance go on to the next one, continuing the process until you are debt free.
Consolidate Your Debt
This may be simplest solution. Debt consolidation will leave you with just one payment instead of three or four. If your credit’s good you can take out a consolidation loan – a personal loan – that has a lower interest rate than what you’re paying in the aggregate on your current debt. You can use the loan to pay off your debts, leaving you with one payment of a fixed amount each month.
Another form of consolidation involves a balance transfer credit card. You’ll need good credit here, too, but if you can get one of these cards that has a 0%-interest rate for a promotional period, you can shift your high-interest debt onto it and make one monthly payment. Just make sure you can pay off your old debts before the introductory period expires and your rate shoots back up.
Use A Budget
Make a budget, make a budget, make a budget. That’s all you hear, right? Well, for good reason. You truly do need to know where your money’s going so that you can get a handle on your spending. Seriously, unless that’s under control, all the get-out-of-debt strategies in the world will be for naught. In fact, you’ll find yourself back in the same situation. Establishing a budget will not only help you curb unnecessary spending — it may also free up more cash to put on your debts.
Take these tips for paying off credit card debt and make them work for you. You needn’t be burdened with debt forever – take action today.