Credit card debt is something that probably all people are aware of these days. However, for some, it has become a bigger problem than they could handle. It is actually quite easy to fall into credit card debt – a few misjudgments, a few bad financial moves and you are there. For many people out, there it starts from the smallest things and grows over time. To manage the problem of credit card debt, you have to spend more money than you actually have. By doing so, you get into debt. The more you keep doing it, the bigger your debt gets.
Credit card debt in the United States of America
Many studies showed that nowadays, the average American household is carrying more than $15,000 in credit card debt alone. This figure is without even including the data of debt types such as student loans, mortgage debts and others. It all shows that on one side, life has gotten much more expensive without almost any increase in the level of average income. On the other side, many people are doing a really poor job at managing their finances. This overall credit card debt tendency showed that credit card debt is going to become an even bigger problem in near future. So it is extremely important for people to have the necessary information about the issue to be able to successfully deal with their credit card debt and regain their financial stability once again.
How to pay off credit card debt
There are many different things a person can do to deal with his credit card debt. However, depending on the way that you are dealing with your credit card debt, it may be harder and take you longer to pay it all off or you may be able to do it a lot easier and faster, that is if you have a specific plan and are able to follow it through. You may have already tried different approaches dealing with your credit card debt. Below, we are going to give you some steps and ideas that you can follow. These methods that can really help you pay off your credit card balances as fast and efficient as possible. Let’s get started.
Tackle the credit card money that you owe like a pro
Stop making only minimum monthly payments on your card balances
The first thing you need to understand is that a lot of the information you may have gotten from your credit card company as well as other advertised information regarding credit card debt repayment might have been quite wrong. Credit card companies will always advise you to make only minimum payments towards your credit card debt balances. What they often fail to tell you is that by doing so, you will be mostly paying money only on the interest of those card balances. That way, you will not actually see your overall debt getting reduced. Yes, it may be easier for you to manage your monthly budget that way, but if you continue down this path, you will be carrying your credit card debt for the rest of your life. What you need to do instead is, get the details of your last few debt payments, see the exact amount of interest that you have paid and make sure to surpass that amount in your future credit card money debt payments.
Prioritize your debts
If you are putting money towards your credit cards in a random order, if you are doing it chaotically without really having a clear vision of which debt you want to get rid of first, you will actually repay your credit card debts a lot slower compared to if you make a clear plan for your debt repayments. There are two ways that you can approach your credit card debt to repay them a lot quicker.
Start from the one with the highest interest rate
It may sound a bit scary to take on the debt with the highest interest rate. But by doing so, you will be able to get rid of the debt that takes most of your money. In order to that, you would need to focus all your attention on that highest interest rate card balance while making only minimum monthly payments on your other balances. That way, you will be able to get rid of that debt while not falling too far behind on your other accounts. When you get rid of that debt with the highest interest rate, every next credit card balance that follows will feel a bit easier to get rid of. Succeeding in this repayment method will give you a much-needed confidence boost, enough to keep you focused and dedicated to your end goal.
Attack the card with the smallest balance
Tackling the credit card with the highest interest rate is one road you can take. The other one is to start off with the smallest debt. By focusing all your energy and funds on the smallest debt, you will be able to quickly pay it off. By doing so, you will decrease the overall number of your credit card debts. One less debt means more money available for the faster repayment of the smallest debt that follows. By using this method you would be able to gain huge momentum and confidence, as with the repayment of each debt, your task will become a bit easier.
Get in touch with your creditors
You can always try to contact the credit card companies that you owe money to, explain them the specifics of your current financial situation and see if there is some way that they can help you. There are many credit card companies that will be more than willing to help you out by waiving some of your late payments or by reducing the interest rate on your credit card balances for a certain period of time.
- Companies operating in the loan lending industry business are always interested in keeping long-term loyal customers. If lowering the interest rate on your credit card debt or waiving off a few late payment fees will get you to stick with them in the future, most of them will be more than willing to do so.
Adjust your lifestyle according to your goals
In order to have success in your battle with credit card debt, you may need to change a thing or two so that you can be able to reach your desired debt-freedom destination.
Improve your budget management
Not only will improving your budget managing give you better chances of successfully dealing with your unsecured debts, it will also help you sustain that free-of-debt state once you reach it. After all, what is the point of putting all that effort into getting out of your multiple debts in if are going to get back to that same spot after a few months? Here is what you would need to do:
- Start tracking and calculating your every single expense
- Review all of your listed expenses and see which of them should you cut out completely and which should you minimize
- Create a safety fund so that you would be able to deal with an emergency expense if you face such trouble along the way.