Do you know the percentage of people who have credit card debt? A study shows that up to 30% have $ 5,000 or less in debt. 21% have more than this amount. We are talking about more than 40 million people who find themselves in such situations.
You may very well be one of those contributing to the shocking statistics. Debt can be devastating on a personal level. And, it could impact your credit score, causing many repercussions.
It can be difficult to get financing with bad credit scores. Some jobs may be inaccessible, and even getting an apartment may be impossible. The good news is that there are ways to pay off credit card debt. We’ll show you how below.
1. Keep a close eye on your finances
It is possible to get into debt because of your expenses. The first step is to honestly consider how to manage your finances. Are your expenses more than what you bring back?
There are ways you can be successful in spending by paying off debt. You can, for example, reduce your expenses. Give up eating in expensive restaurants. How about cooking a bit more at home.
Subscribe to platforms like Chuck finance can give you a little more control over your finances. You have access to financial information. The platform allows you to track your credit usage, thus ensuring a good credit score.
You receive notifications about things like overdraft fees, spending thresholds, and balance updates. Reports are accompanied by charts and other visualizations. This helps you to have an overview of your expenses.
Experts will also identify and recommend methods of minimizing interest rates. And that’s not all. Analytics provide insight into spending and help you build healthier financial habits.
2. Get rid of expensive sales first
Sit down with a notebook and pen and write down all your debts. Rank them from highest to lowest interest rate.
Now set aside a minimum amount on each. Add the extra cash you have to high interest debt. What you will do is the debt repayment avalanche method.
3. Try the snowball method of debt repayment
The snowball method of debt repayment is the reverse of the avalanche method. It forces you to pay the lowest balances first. But, that doesn’t mean that you forget to make minimum payments on other debts.
The advantage of this method is that you check off your debts as you write them off. It can be motivating to see the sales decrease. As you write off debts, allocate the money you would otherwise pay to the minimum balance of the largest debts.
4. Use balance transfer credit cards
Some lenders have the option of transferring the balance by credit card. They give a window of up to 20 months, without interest. It provides an efficient way to manage high interest credit cards.
Read the credit card terms and conditions carefully. After the zero interest term, they will apply interest rates. It helps to know what this is to avoid any unpleasant surprises in the future. A high interest rate could bring you back to credit card debt.
Take note of the transfer fees and the credit limit on the card. There is also a qualifying criterion, which often ranges from good to excellent credit scores.
5. Pay off student loans
If you are a student, take the time to research the best credit card for students. There are tons of resources online that can give you the information you need. Just make sure you can meet the payment requirements to avoid getting into debt.
So what if you have student loans? Well, paying off student loans has the benefit of giving you more flexibility and more freedom with your finances. Try to allocate more than the minimum monthly amount for compensation.
Note that some student loans have higher interest rates. Combine that with the credit card rates, and it can be pretty overwhelming. In this case, we recommend the avalanche method of debt repayment.
Take care of the high interest rates on student loans while making minimum payments on credit card debt.
6. Debt consolidation
Let’s say you have multiple credit cards. You can erase these debts by consolidating them into a personal loan. A good credit score can entitle you to amounts large enough to cover the entire balance.
Shop around for loans at favorable interest rates. It should ideally be less than what you pay on credit cards.
7. Borrow from family and friends
Another option available to you is to borrow money from family or friends. The bad news is that you will always be in debt. But, depending on the relationship, they may not charge interest. You have access to cash that will help you settle some of the balances.
A word of warning though. Money and friendships don’t mix. It is of the utmost importance that you pay what you owe at the agreed time. There could be irreparable damage to your relationships if you don’t keep your word.
As appealing as this avenue of debt payment may sound, consider it only as a last option.
Financial prudence can prevent you from incurring credit card debt. But, the reality is, life doesn’t always turn out the way we expect it to too. You could find yourself in debt and need a solution.
We have shared some ideas on how to get out of credit card debt.
Certain spending habits can put you in hot water. If the expenses are greater than the income, there is a problem. Keep an eye on your finances by signing up to platforms like Chuckfinance.
Use the avalanche or snowball methods to erase high or low interest rate debt.
Manage your expenses when paying off debt by cutting unnecessary expenses. A good idea is to find a budget and stick to it.
Consolidate your credit card balances by taking out a personal loan and paying them off immediately. You can also borrow from your loved ones, including your family and friends. The only caveat is to make sure you pay them back at the agreed time.
Good luck with erasing your credit card debt.