In modern society, most people feel constantly stressed out over their finances. Everything around you makes you feel like you do not have enough money. There are many people out there who either struggle with their monthly bills or are constantly unable to afford the lifestyle they desire. Such people usually tend to carry a balance on their credit card long after their grace period has expired and so that debt grows more and more. There are, however, some ways for people with credit card debt to pay it off and regain their financial freedom through good repayment strategies or with a credit card debt consolidation. Below, we are going to discuss what a credit card debt is, how it works and most importantly, how to pay off credit card debt.

What is a credit card debt?

What is a credit card debt?
What is credit card debt?

Credit card debt is a type of unsecured debt that is accessed through a credit card. Even though all purchases by a credit card, technically, create a debt to the person using that card, these debts usually do not incur interest before the grace period expires. Therefore, people who are paying off their credit card balance each month are normally not considered to have credit card debt. Credit card debt applies more to people who continually keep carrying a balance on their credit cards after the grace period has already expired and therefore the debt begins to bear interest.

How to pay off your credit card debt

For many people, it may seem a lot easier to ignore their credit card debt. However, the longer this credit card debt stays unmanaged, the worse it is going to get. Even though paying off your credit card debt is not going to be an easy task, it is definitely not impossible to be achieved. Here are some strategies that you may want to use to deal with your credit card debt in a fast and effective way.

  • Make more than the minimum monthly payment

Make more than the minimum monthly payment
Make more than the minimum monthly payment

There is nothing that credit card companies love more than clients who pay just enough to get by each month. By doing that, what you are mostly paying off is interest. You are only paying bits off your actual credit card debt. Take a look at some of your recent credit card statements to get an actual idea of what your monthly interest actually is. Once you have done that, to really see the difference in your statement, budget as much of a payment as you possibly can over that amount.

  • To know how much above the minimum payment you should make each month, you have to know what interest is. Interest is the price you pay for using the money. So when you are making only minimum payments each month, what you do is keeping your interest from reaching sky high. But that is all. What you want to do each month is to pay an amount that goes over and beyond that interest, an amount that helps taking care of the principal.
  • You should first pay off the debt that has the higher interest

Even though it looks like this is pretty obvious, it is still something that many people forget to do. If there is a credit card charging you 12% APR (annual percentage rate) while there is another one that is only charging you 8% annual percentage rate, you should concentrate on the debt that is under the 12% interest. You should make this debt your absolute priority over the other one and make sure you pay it all off before you even acknowledge the existence of the debt with a smaller annual percentage rate. Of course, while all your focus is on the debt with higher annual percentage rate, in the meantime the other one will accumulate interest, but since you are going to pay interest anyway, it is better to do it on the debt that has a lower annual percentage rate.

If doing this sees like a too hard of a task, you can try to snowball your debt. If the interest you have are pretty much all the same or you are just overwhelmed by the number of payments you have to deal with each month, make minimum payments on everything except the lowest balance. This one you should attack as hard as you can, so that it can disappear as fast as possible. Once that payment is gone, take the same course of action until the next debt disappears. Repeat that strategy over and over until there are no more debts for you to repay. With every debt you repay, you will feel more confident. That way, you will gain strength to finish what you have started and achieve your goals.

Have conversations with your credit card companies

Talk to the credit card companies you are working with and try to explain what the financial situation you are in and see if there is anything they may be willing to do to help you with the debt. There certainly are credit card companies that may lower your interest for a certain period of time. Others may waive your current late fee balances.

  • In case you have been their client for a long period of time, you may want to mention that in your conversations. While there are credit card companies that do not really care whether you are a loyal customer or not, there are others who would really appreciate it. Such credit card companies usually do whatever they can in order to keep their customers loyal and happy for as long as they can.
  • Have conversations with your credit card companies
    Have conversations with your credit card companies

    If you fail at your first attempts, do not give up. Go to someone that is higher in the hierarchy. If you do not make any progress with the person you are speaking to, speak with his supervisor. If that also does not take things in the right direction, say that you want to speak to the retention department. If that attempt also fails, try calling back in one or two weeks.

    • When you go to a meeting with your credit card company, you need to go absolutely prepared for it. Make sure you have a list of other offers you have received. You have to know the terms of your interest and check the interest rates that their competitors are offering so that you can use that information to your advantage.

Closing cards with existing balances is something you should never do

Closing cards with existing balances is something you should never do
Closing cards with existing balances is something you should never do

While such action may attract your attention and seem like a simple and easy way to get a handle on your debt, what is actually going to do is absolutely ruin your credit score and so you will still be on the debt hook. Instead you should think about how to increase your credit score.

  • If there is an account that you think you have to close, you will need to pay it off as fast as you possibly can. You will also have to ensure that the credit card company records show that this account was closed not upon their request but upon yours. Do not forget to make the request in writing.

You need to move your debts around

This should be very clear. Transferring from a credit card that has 11% interest to a credit card that has 0% interest rate may really damage your short-term credit. Having said that, however, if you barely chop away your debt because of the high interest, that will surely damage your finances in the future. Look around, find opportunities for low-interest rate, long-term credit. Maybe consider transferring some part of your debt into a credit card with a low-interest rate that you already have. Here are some things you may want to keep in mind:

  • Think about how long the low-interest rate is going to last. Depending on your specific situation and the total amount of debt you need to repay and the speed you will be able to pay it off, a 0% interest for a period of six months may be worse than 2% interest rate for a period of 18 months.
  • Think about what the interest percentage will be after the end of the introductory period. What if it jumps to 16% after a year? And if that happens, do you think that you would have managed to pay off enough of the debt amount by the time this jump in the rate occurs?

The method you choose to consolidate credit debt is dependent on your debt amount and the level of discipline you are willing to maintain. Choose a consolidation plan with care. Your aim should be to achieve your objectives right from the beginning. Most people think that consolidation is a loan that takes multiple consumer accounts and consolidates them into one. This is true, as you will now be paying only one loan with one monthly installment. You can also now qualify for consolidation without providing any collateral. Lenders in our network have repayment plans and terms that have taken care of the unsecured loans. Today, the best way to consolidate credit card debt with bad credit is to consider consolidation lenders.

Ways to Consolidate Debt

Ways to Consolidate Debt
Ways to Consolidate Debt

There are different ways that people use to consolidate their debts. They include taking out consolidation loans, credit counseling, and debt settlement. However, the most effective one is taking out consolidation loans.

  1. Credit counseling is a method when you trying to get out of debt without interfering with your credit. It involves making one monthly installment to a credit counseling organization. The organization will then send the payment to all your creditors accordingly. You will also be liable to a reduced interest rate and at times, no interest rates. The total time you will take is also shorter depending on the amount of debt. With this, you will still be having different loans to pay even though you will only be dealing with one organization. You will still feel the pressure.
  2. Considering consolidation loans, your payment and interest will be lower. You will also pay for a longer time but you should have cleared off all your loans immediately. Consolidation loans allow you to accept new payment terms that are independent of your previous creditors. You will be dealing with direct lenders like those in our network. The lender you choose will pay off all your loans and then offer you a flexible repayment plan.
  3. Debt settlement: this is a method that is becoming common too. You will have a consultant who will negotiate with your creditors to reduce the balance of your unsecured debts. After this, you then make payments to the consultant and they will forward your payment to the creditors. This is to continue until you complete the balance.

It is important to note that the best way to consolidate credit card debt is to ensure it has a significantly lower interest. Interest plays a huge role in making the method effective and also reducing the total amount you owe. You are only to choose an appropriate lender who will offer to pay off all your debts and then require you to pay a reasonable monthly installment. There is no paperwork required as you can even do this from home. You need to understand that secured loans will give an even lower interest rate but you will also be risking your collateral. You can easily get a lender working with us who is willing to offer you a consolidation loan without any collateral. You will bring all your credit card debts under one new credit card and all your other debts shall be cleared.

Benefits of a Debt Consolidation Loan

 

Benefits of a Debt Consolidation Loan
Benefits of a Debt Consolidation Loan
  • When you use the best way to consolidate credit card debt, you will be sure of eliminating all your credit card debt at once. Actually, you will only be responsible for one loan now and not many debts to pay for different credit cards.
  • Due to the fact that credit cards have high finance charges, it is difficult to pay off the balances. Mostly, the minimum payment barely takes care of the finance fees. This makes it difficult to reduce your credit card balance. However, if you decide to consolidate credit card loan using a loan, all your balances are combined together. In addition, the loans will be offered at a reduced interest rate, hence you will be on your way to becoming debt-free.

Factors to Consider Before You Consolidate Debt

 

Consider Before You Consolidate Debt
Consider Before You Consolidate Debt
  • You need to get the exact amount of credit card debt, you have and make a comparison on the interest rate. The consolidation loan you choose should have a lower interest rate. Ask your lender to show you all the calculations to ensure that the total amount you pay at the end is less than your current credit card debt. Fortunately, lenders working with us are experts in financial matters and therefore, you will get the best advice and deals.
  • Ensure that you get a lender who fully explains the terms and conditions to you before allowing you to sign up. We will link you to lenders who are willing to explain all the terms, total amount and charges. You will also be able to know any additional fees. Furthermore, the repayment plan will be clear to you, hence you will know the exact time when your loan will be completed.
  • You should be able to acquire your credit report and also get more information about your lenders from the department of Consumer Affairs in your respective state. Lenders working with us are duly registered and all work within the set rules of your particular state. All your personal and credit information will be held private as per the law.
  • Confirm whether your lender offers credit counseling. Reputable lenders like those in our list offer their clients with debt management and counseling services at no extra cost. If you choose one of the lenders in our network, you will be able to learn tips on keeping away from cumulative debts in the future.
  • Choose a consolidation loan that does not require you to put up your home as collateral. Even though many traditional lenders require you to have collateral, those lenders you will find with us have unsecured loans. With them, your property will be safe.
  • Ensure that the whole deal is not geared towards pushing you further into debt. Your lender should be giving you a loan that is enough to pay your credit card debt in full. The best way to consolidate credit card loan is to have a consolidation loan that will pay all your debts. When you take out an excess loan amount, you are probably going to use the excess amount unnecessarily and will have to pay back more. Your main aim for consolidation is to clear your credit and pay the least amount possible at the end.
consolidation_loan
consolidation_loan

Many people are still trying to find the best way to consolidate credit card loans. Actually, it is quite overwhelming to deal with multiple payments all at the same time. With consolidation, you can find a lender who will offer you a reduced fixed interest rate throughout your repayment period.

If you want to save more, then you cannot avoid consolidating your credit card debts. Start by calculating the current interest rates you are paying and get a total amount in your hand. Go ahead and look through the many lenders we work with and compare the totals. You will definitely find a lender that fits your financial profile. Lenders with our network work to make your financial life easy and relaxed.

 

 

 

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