Do you know what percentage of people have credit card debt? Study shows that up to 30% have debts of $5,000 and less. 21% have more than this amount. We are talking about more than 40 million people who find themselves in such situations.
You may be one of those contributing to the shocking statistics. Debt can be devastating on a personal level. This may affect your credit score which leads to many repercussions.
Land financing with poor credit scores can be difficult. Some jobs may be inaccessible, and 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 money
It is possible that you will fall into debt because of your spending. The first step is to take an honest look at how you manage your money. Is your spending more than you bring in?
There are ways to manage spending when you pay off your debts. You can, for example, cut back on your expenses. Give up eating at expensive restaurants. How about cooking at home a little more.
Register on platforms like chuck financial It can give you more control over your money. You can access financial information. The platform allows you to track your credit usage, ensuring you a solid credit score.
You get notifications about things like overdraft fees, spending limits, and balance updates. Reports come with charts and other visualizations. It helps you get a bigger picture of your expenses.
Experts will also identify and recommend interest rate reduction methods. And that’s not all. Analytics give insight into expenses and help you build healthier financial habits.
2. Get rid of expensive stocks first
Sit down with a notebook and pen, and write down all your debts. Rank them from highest to lowest interest rates.
Now, set a minimum amount for each. Add any extra cash you have to the high-interest debt. What you will do is file Avalanche method to pay off debt.
3. Try the snowball method to pay off debt
The snowball method of debt repayment is the opposite of the avalanche method. It requires you to pay the lowest credits first. But this does not mean that you forgot to make minimum payments on other debts.
The advantage of this method is that you cancel your debts when they are settled. It can be motivating to see the balances decrease. As you liquidate the debt, set aside the money you would be paying toward the bottom line of your larger debt balance.
4. Use credit cards for balance transfer
Some lenders have the option of transferring balance from credit cards. They give a window of up to 20 months, without interest. Provides an efficient way to manage high interest credit cards.
Read the credit card balance terms and conditions carefully. After the zero interest term, interest rates will apply. It helps to know what this is to avoid any nasty surprises in the future. A high interest rate could put you back in credit card debt.
Note the transfer fee and credit limit on the card. There is also a qualification standard, which is often good for excellent credit scores.
5. Pay off student loans
If you are a student, take your time to search for Best credit card for college students. There are plenty 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 happens if you have student loans? Well, paying off student loans has the advantage of giving you more flexibility and freedom in handling your money. Try and allocate more than the minimum monthly amount towards clearing.
Do note that some student loans have higher interest rates. Combine this with credit card rates, and it can be very confusing. In this case, we recommend the avalanche method of debt repayment.
Take care of high student loan interest rates, while making minimal payments on credit card debt.
6. Debt Consolidation
Let’s say you have several credit cards. You can liquidate these debts by consolidating them into a personal loan. A good credit score can qualify you for amounts large enough to cover the entire balance.
Shop for loans with favorable interest rates. Ideally, it should be less than what you would pay with 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 still be in debt. But, depending on the relationship, they may not charge interest. You can access funds that will help you liquidate some balances.
A word of caution though. Money and friendships do not mix. It is critical that you pay what you owe on the agreed time. There may be irreparable damage to your relationships if you don’t keep your word.
As attractive as the method of debt repayment sounds, consider it only the last option.
Financial prudence can keep you out of credit card debt. But the truth is, life doesn’t always go as we plan it to either. You may find yourself in debt and need a way out.
We’ve shared some ideas on how to get out of credit card debt.
Certain spending habits can land you in hot water. If spending is higher than income, there is a problem. Keep an eye on your finances by signing up for platforms like Chuckfinance.
Use avalanche or snowball methods to pay off high or low interest debt.
Manage spending when paying off debts by cutting out unnecessary expenses. A good idea is to set a budget and stick to it.
Collect credit card balances by taking a personal loan, and pay it off in one go. You can also borrow from your loved ones, including family and friends. The only caveat is to make sure you pay them back at the agreed time.
We wish you success in settling your credit card debt.