How to Deal with Credit Card Debt Quickly and Efficiently
Credit card debt is the most common type of debt. It isn’t even seen as debt among many folks as they continue living with it and thinking of the card money as their own. This mindset of making the bank’s money your own can be highly dangerous as the debt keeps building up, and you don’t have a way to deal with it. Overwhelming credit in your cards can also be bad for your credit score.
If you keep making minimum payment while adding more and more purchases, it can take decades to pay off your balances. That is how much a credit card can be bad for you. The bitter news is that most of us don’t even rely on a single card to go on in life. We have multiple cards to support all our purchases and, as a result, have debt sitting in all of them. Don’t blame yourself for spending on emergency cases and living a debt-free and easy life with the below lasted tips on credit card debt relief.
Pay the Smallest Balance
This method of paying off debt fast is called the snowball method. It helps you get your smallest amounts of credit card debt out of the way quickly and focus on the real cause of your problems. This way, you can see some clearance in your debt and get the motivation to move forward and get all your credit removed this way. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance. You keep going from one card to another and soon you will find yourself with just a couple of balances to focus on. It might not make the best sense financially, but it can be motivating as you see your balances get paid off.
Large to Small
The opposite of the snowball is the avalanche method. Under this method, you pay off your largest and the most problematic debts first. The debt avalanche targets debts with the highest interest rates first. This route may help you save time and interest over time and makes the best sense financially.
You need to start doing your work, and rank cards from highest to lowest interest rate. So instead of paying gradual monthly payments towards all your loans, you get to pay off a giant loan altogether and move on to another. Add up all the monthly minimum payments, and then figure out how much extra you can pay beyond the total of your minimums. Put that extra money that you can pay towards the highest interest card.
Transfer Credit
Transferring credit is a popular option. It may be a bit tricky, but it works once you get the hang of it. Moving credit to your other cards is a smart way of relinquishing your debt and being debt-free soon. In this method, you keep transferring your debt from one card to another, which has the least interest rates and fees. This way you can minimize your interest payments while paying off your debt. Look at opportunities like 0% intro APR offers that you usually get when you sign up for a new card, or even offers you receive for existing cards.
Personal Loan
If your credit score is back on track, you are open to the practical option of taking a personal loan to pay off your debt. It sounds counter intuitive, but getting another loan may be more feasible when you are looking at the big picture. If you handle the loan properly and pay off the monthly payment with interest while paying off other debts, you can see clarity soon. The loan needs to have a lower interest rates than what you’re already paying for your credit card debt, for this to work.
But before you use a personal loan to pay off credit card debt, consider not only the interest rate you receive, but also the repayment term lenders offer. Choosing a longer repayment term for example, could cost you more in interest. So you really need to sit down and do the math on what works for you.
Debt Consolidation
Debt consolidation is another debt clearance method, similar to a personal loan. A debt consolidation loan is a single loan you use to pay off multiple debts, such as balances on high-interest credit cards, medical bills or other unsecured debt. This strategy can lower the total interest you owe on the debt and help you pay it off faster. Online lenders, some banks and credit unions offer debt consolidation loans. If you qualify, the lender deposits the loan into your bank account, and you use that money to pay off your debts. Some lenders will even send your loan proceeds directly to your creditors, saving you that step. This also makes the process easier as you only need to worry about just one monthly bill.
Debt Settlement
Debt settlement is a way to deal with your credit debt with the help of an agency specializing in conversing with various creditors and helping you reach a settlement. This way may seem like the easiest but has its complications for credit card debtors. You can only find a good company with a reference or vastly searching between various agencies. There are many companies that prey on needy customers, and often leave them even worse off at the end. Don’t trust them with your cash for settlements until you see some action. Work out a way to pay your debt in the shortest time, that is also manageable for you.
