Six Ways To Pay Off Credit Card Debt
Credit cards are convenient, safer than carrying cash and will help you build your credit record, but if used incorrectly, they can lead you into a vicious cycle of debt. As a credit counselor, I’d like to share some tips for paying off your credit cards faster.
Pay the highest interest debt first.
The debt with the highest interest rate costs you the most money. The less time you carry a balance on that card, the less time you will pay that high interest rate. When the balance is wiped out, move on to the next highest interest rate card.
The debt with the highest interest rate costs you the most money. The less time you carry a balance on that card, the less time you will pay that high interest rate. When the balance is wiped out, move on to the next highest interest rate card.
Pay every two weeks
Instead of paying your credit card bill once a month, when it’s due, try making a half payment every two weeks. Many of us are paid bi-weekly, so this evens out your cash flow. This payment method results in making more payments per year, since there are more than four weeks in some months. There are two months of the year that you end up making three payments instead of two.
Pay more than the minimum
Pay as much as you can each month. If your minimum payment is $100, double that to $200 or more. If not, pay as much as you can over the minimum. Sometimes we can find more money if we look over our budget a little closer. Skip eating out at lunch, and bring food from home instead. Instead of going to the movies, rent a movie and have popcorn and sodas at home.
Snowball your debt payments
Pay particular attention to the card with the lowest interest rate. If you have not reached the maximum limit on that card, consider transferring a higher-interest bill to that one.
Borrow against your life insurance
If you have life insurance with a cash value, consider borrowing against the policy. You would be borrowing your own money and the interest rate is typically lower than the credit card rates. But, it’s critical that you pay it back.
Renegotiate terms with your creditors
Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you’ll have no other recourse but to declare bankruptcy. Ask for a new and lower repayment schedule and a lower interest rate.
Usually, creditors will do what they can to protect themselves against a total loss. But please, don’t confuse this with debt settlement. Unfortunately, debt settlement usually involves ignoring your creditors! We think it’s much better if you let them know what’s going on.
We’re Here to Help
Some people think that not having a lot of money saved constitutes an emergency. In reality, carrying a rotating balance on your credit cards is more of an emergency. It makes more sense to use your low-interest savings to pay off high interest credit card debt.
If you’re suffering from high credit card debt and need help figuring out your next steps, take advantage of Clearpoint’s free credit counseling sessions. Call 800.750.2227 (CCCS) or get started now online.
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