The Top Ten Tips for Paying off Credit Card Debt Quickly
If you’re like a lot of Americans, you have credit card debt that carries from month to month. Your goal is to get out of debt as quickly as possible, but you’re not sure how. This article will go over the top ten ways to pay off your credit card debt quickly.
1. Track Where You are in Debt
The first thing you should do before you begin paying down debt is see where you are. Make a spreadsheet of each credit card with the balance and interest rate. This spreadsheet will tell you exactly how far you are in debt. It will also give you an idea about which cards are costing you the most in monthly fees. Once you’ve done this, you’re ready to start paying down your debt.
2. Stop All Credit Card Purchases
If you’re serious about getting out of debt, stop adding to it immediately. Stopping all credit card purchases is the first step to getting out of debt. You want to lower your overall balances, not add any more to them. The only thing you should do with your cards is make payments that require credit cards. If that’s the case, you should have no issue paying those off each month.
3. Create a Budget and Track Your Spending
Once you’ve sworn off buying anything else on credit, create a budget. This will let you set a limit, so you have money left over for payments each month. A budget is also a useful tool to help you track where your money goes. You’re liable to end up right back in debt if you’re not sure how you got there in the first place. The process of creating and sticking to a budget is sound financial management practice. You’re more likely to keep these habits after you get out of debt if you’re used to them.
4. Pay off Any High-Interest Cards First to pay credit card debt quickly
Your highest interest card is costing you the most money each month in credit card fees alone. You should take any extra money and pay this balance down as quickly as possible. Once that card is paid off, continue to the next one with the highest interest rate. Each time you manage to pay a card off, you’ll have a little more money left over each month. Invest this money in continuing to pay down your high-interest cards, and don’t add a balance back.
5. Pay More Than the Minimum Payment Each Month
Once you begin paying on your balance, pay more than the minimum payment each month. If you can afford it, double the minimum payment. By paying double, this will help you pay back your debt in half of the time. If you can’t afford to pay double the amount each month, pick a payment amount that works and stick to it. If you’re able to, put a little extra on each payment, as any little bit helps. In the future, you need to avoid credit card balances.
6. Sell Items for Extra Payment Money
No one likes the thought of selling their possessions. However, this is a viable option to get quick money to help lower your debt balance. If you can’t sell anything, look at any ‘extras’ in your monthly bills like cable or data plan on your phone. These are considered luxury items, and you can live without them if you have too. You could also consider switching to Netflix or Hulu as a cheaper alternative to traditional cable.
7. Call Your Credit Card Company and Ask for a Lower Interest Rate
Did you know you could get a lower interest rate on your credit card by asking? Call your credit card company and explain your situation. Make sure you ask them about the possibility of a reducing the interest on your credit card. Ask to speak to a supervisor or the retentions department if the first person can’t do anything for you. Most credit card companies are willing to help you.
8. Consider Consolidating Your Debt to pay credit card debt quickly
If you know you can pay your debt off in a year, debt consolidation may be right for you. This will require you opening a new credit card to transfer all of your current balances to. You also have to think about the balance transfer fees because you most likely will get those added on. However, if you calculate all of this and you can still afford to pay your debt off within the new card’s time frame, go for it. You should look for a card with a low-interest rate and a zero percent introductory rate. Also, make sure you read all the fine print, so you know what you’re getting. The Chase Slate and the Discover it Cash cards are good examples of the zero percent APR with introductory offers on balance transfer fees.
9. Don’t Close Cards After You’ve Paid Them Off
You may be tempted to close your credit cards out after they’re paid off. However, this isn’t a good idea because it will help your credit utilization ratio. This ratio factors into your credit score. It looks at how much credit you’re using against how much credit you have available. If you close cards, you’ll have less credit available, and this can hurt your credit score. You could also lose credit history by closing cards. So pay them off but leave them open.
10. Develop a Goal & Find a Support System
If you have a goal in mind to accomplish after you debt is paid off, you’ll be more motivated. So set a goal like saving for a down payment on a house. Maybe there’s a trip you’ve always wanted to take but never had the money to take it. Finally, find a good support system. This can be in person or an online forum. You need people who will encourage you and motive you to keep going. The better of a support system you have, the more likely you are to succeed in paying off your debt.
Follow These Ten Steps to Pay Credit Card Debt Quickly
This article has touched on ten ways to get out of credit card debt quickly. First, you have to find out exactly how much you owe and create a budget. You should track your spending and stop using your credit card immediately. We talked about different options to pay down your debt like consolidation and balance transfer cards. We also touched on the importance of keeping your credit lines open. Finally, a support system and an end goal are both critical to your success. If you follow this guide and do a little research, you should be on your way to being debt free.
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