How to Wipe Out Credit Card Debt
Digging out of credit card debt can seem like an impossible task at times. If you feel like you’re drowning, don’t despair. You’re not alone in your struggle with debt. The average household in the United States has more than $15,000 in credit card debt and roughly $129,579 in total debt. However, you don’t have to spend the rest of your life living with crippling debt. Here a few things you can do that may help you get your finances back on track and regain your peace of mind.
Start by paying down the credit cards with the highest interest rates. Bankrate has a handy debt payoff calculator that can assist you with tracking your goal. If you tend to get discouraged easily and would like to see quicker results, another option would be to try the debt snowball method. This involves paying down the credit card with the lowest balance first. That way, you’ll start to see some of your smaller debts disappear quickly. The only drawback is that you will end up paying more interest on all of your debt in the long run, since you won’t be tackling those higher interest cards first.
Another money move worth making is contacting your credit card issuer and requesting a lower interest rate. A CreditCards.com study found that two out of three cardholders who ask for a lower interest rate have their request honored. So reaching out to your credit card issuer is worth a try. Know, however, that your request might not be granted if your account is not in good standing. Customers who pay their bills in full and on time, every time, are more likely to be able to negotiate better terms.
If you want to make a significant dent in your debt, you’ll need to develop a budget. A realistic budget will provide you with a clear picture of how much money is coming into and going out of your household. Once this new perspective is gained you’ll be able to see where you can cut back on your spending and find extra money to put toward your credit card bills. Budgeting tools are a great way to stay on top of your debt-repayment efforts. Two budgeting tools to consider are Mint and Buxfer.
Another key to chipping away debt is to keep tabs on your spending. If you spend as much as or more than you’re paying off, you’ll have a difficult time reaching your financial goals. Avoid making an impulse purchase by unsubscribing from email newsletters for your favorite stores and staying out of the mall until you’re closer to paying off your debt.
Make more than the minimum payment on your credit cards. Sending in the minimum required payment will just prolong the debt repayment and result in more interest payments over time. If you can, send in a double payment each month. Putting more money toward the interest will help you quickly lower your balance.
You can also consider a balance transfer or debt consolidation. Transferring a balance to a credit card with 0% interest can be a good way to help you pay your debt in less time. Consolidating debt can also be a good move when you have several debts to pay and you need help managing your payments. If you need assistance with overwhelming debt and you don’t feel that you’ll be able to keep up with payments, call your credit card issuer and let them know you are experiencing financial difficulty. It’s also a good idea to get in touch with a certified credit counselor. The National Foundation for Credit Counseling has a directory of certified credit counselors who may be able to help you create a debt management plan so you can regain control of your debt.