5 Ways to Pay Down Credit Card Debt Faster
Have you been in credit card debt for what seems like an eternity? Do you have so many bills that payday feels more like debtday? You and many other consumers are in the same boat. Total credit card balances in the United States are at $703 billion, a $19 billion increase from the first quarter of this year. Furthermore, total U.S. household debt is $11.85 trillion. This includes personal loans, credit cards, car loans, and educational debt. Fortunately, there’s light at the end of the debt tunnel. Here are a few adjustments that can help you pay off your debt just a little bit sooner.
1. Get a side job
Attacking debt involves one of two actions: spending less or adding more money. If you’ve found that you can’t cut any more fat from your budget, it’s time to bring in more cash. Income from a part-time job will provide you with the extra cash you need to make larger monthly payments. By throwing money at your debt, you can shave months off your anticipated payoff date.
2. Negotiate a lower interest rate
If you have an excellent payment history, your credit card issuer may agree to lower your interest rate. Just give the card company a call and ask. This one simple move could save you hundreds of dollars in interest payments and consequently help you clear out your debt earlier.
3. Make more than the minimum payment
Don’t get stuck in the rut of only making the minimum payment on your credit card. While it’s great to pay your credit card bills in full and on time each month, it will take a very long time to become debt free if you only pay what is owed. Making a larger payment each month (an additional $10 or $15, for example) is beneficial in the long run because you’ll pay less in total interest.
4. Focus on one debt at a time
Center your attention on paying off one debt at a time. If you try to pay off all of your credit card debt at once, you will just get overwhelmed and give up before you make any real progress. Start by focusing on the debt with the highest interest rate. If you find that you have trouble staying motivated, another method that may work for you is the debt snowball method, which focuses on the total balance instead of the interest rate. The snowball method suggests paying down the smallest debt first and then working your way up from there. The reasoning behind this method is that you’ll see debts paid off sooner, and that will hopefully help you stay motivated.
5. Stop adding new debt
While the above methods are generally effective, the outcome largely depends on your ability to remain disciplined. It will be difficult to reduce debt if you continue to charge purchases and let your balance steadily increase. Resolve to stop making new purchases and practice self-control. Remember that just because you have the money to buy something new does not mean you should go out and buy it. Learn the art of delaying gratification.