Credit card debt is something that looms over everyone’s head. And that’s okay! Having a credit card can offer many things to people: financial security, an emergency fund, extra spending cash, and so on.
However, interest charges are something that usually gets to the best of us in the end. But worry not!
Here are our top tips to pay off your credit card debt:
Dealing With Minimum Payments
Minimum payments will, most likely, not be enough to cut down your debt. Oftentimes, minimum payments don’t even cover your interest for the month. It’s always a good idea to pay more than the minimum on your monthly payments. Keep in mind it doesn’t have to be very much; a few dollars here and there can make a big difference!
Automatic Payments: Out of Sight, Out of Mind
Have you ever missed a payment for your credit card? I’m sure we all have— but that’s okay. Setting up an automatic payment helps you keep on track (even if it is just the minimum). From there, you can always add on more money if you so wish.
Interest Rates Can Be Negotiated
If you are finding that you’re barely covering your interest charges, it might be a good idea to strike up a conversation with your credit card company about getting a lower interest rate. This rate can make or break your bank account and your debt! Even if you think they won’t negotiate, it’s still a good idea to try.
Balance Transfer Your Credit Card
While this seems counterproductive, promotional offers of balance transfers can help you achieve your goal of smaller debt. Many credit card companies offer 0% interest on balance transfers for 18 months or longer. These transfers can help because it gives you more time to pay back the balance, with no additional fees attached.
Snowball vs Avalanche
No, we aren’t talking about going to a winter wonderland. There are two methods that many people recommend for decreasing your debt: the Snowball Method and the Avalanche Method. In the Snowball Method, you focus on paying down the smallest balance as aggressively as humanly possible.
During this time, you only pay the minimum on other debts. This method helps people feel more motivated. After you pay off that balance, you move on to the next.
The Avalanche Method focuses on paying down the debt that has the highest interest rate. So if you have two credit cards, one at 21.99% and the other at 19.99%, you would focus on paying down the 21.99% card.
While this does take longer to pay off debt, it saves you more money over the long run.
You can always go to your bank to consolidate your loans. What this means is that all of your debt (or as much as possible) will move into one lump sum payment a month, as opposed to multiple payments.
Usually, debt settlement is a last choice resort. Most debt settlement requires that you have over $10,000 in credit card debt. Debt settlement is a negotiation between you and your credit card issuer to determine a payoff amount for less than you owe. Your account will be closed so you can no longer use your credit card.