Despite the perks of owning a credit card, there is a major drawback. Often, cardholders end up with huge debt on their cards, which is stressful and expensive to pay back. Having a lot of debt can lead to financial hardships. Despite the fact that you may struggle to repay it, your credit score is also on the line. Besides, it can be hard to acquire mortgage loans or car loans.
Nowadays, it is very easy to accumulate debt. However, getting out of credit card debt can be another hustle. Therefore, eliminating credit card balances is a smart move you would ever make. Though it can take time, with a combination of smart money strategies and lowering interest rates, you are a few steps away from enjoying a debt-free life. Here are some ways to easily get out of credit card debt:
Way 1: Pay More Than Minimum
To easily tackle credit card debt, you need to pay at least the minimum amount required, which is often two percent of the total balance. This way, you will easily keep your debt in check. Remember, banks usually make money from the interest charged every billing period. The longer you take to repay, the more money they’ll make. On average, the interest amount from the credit card rate can rise because of rate hikes from the banks or an increase in the amount of the revolving credit card.
You should check for the minimum payment warning on your card bill. Here, you will see the duration to repay the balance if you repay in minimum amounts and the interest rate you would pay.
Way 2: Consolidate your Credit Card Debt
Debt consolidation is a process of combining multiple high-interest credit card balances into one fixed, lower-rate loan so you can repay it quickly without increasing the payment amounts. This is a great strategy for someone who has many accounts and finds it hard to track them. You can consolidate the debts by taking out a debt consolidation loan.
Debt consolidation will help you repay the debt easily and inexpensively. You can save a lot of money on the interest rate when you combine the debts on your credit cards. Another perk from debt consolidation loans is that you can make full monthly payments on time. In addition, it can affect your credit score positively. Often, debt consolidation loans come with low-interest rates as compared to credit cards. Thus, if you qualify for such a loan, you’ll easily save money on credit card debt.
Way 3: Consider Balance Transfer
For those good at tracking their credit card payments, a balance transfer credit card can be a great decision. If your credit is good and the credit utilization ratio isn’t high, you can qualify for the 0 percent APR credit cards. However, the 0% offer only lasts from 1 to 2 years, enabling you to transfer the high-interest balances to your new card with ease. This way, you will easily save on the interest rate for this period, making it a quick way to get out of your credit card debts.
Way 4: Increase Payments
You can also double the repayment you make to your credit card debt, especially for those debts with higher interest. Doing this will help speed up the amount of time taken to get out of your debts. If you increase the payment amount, the overall interest rate will also be increased, thus reducing the interest rate you pay.
Way 5: Reduce your Expenses
One of the best ways to get out of credit card debt is to cut back on unnecessary expenses. You need to review the regular expenses, then identify the necessary items like food, utilities, housing, etc. and determine the unnecessary ones as well, like entertainment.
Reducing unnecessary items on your budget list will give you the extra money to help you get out of your debt quickly.
Way 6: Pay the Expensive Debt First
Also known as the Snowball method, this approach aims at repaying the most expensive debts first. It is a great way to get out of your credit card debt easily to first deal with the most expensive debt. Select the debt with the high-interest rate, then focus on paying it first. After paying it in full, choose the next expensive debt and repay it whole. Continue this technique until you repay all your debts till, you’re left with the least expensive debt. This strategy not only helps in paying off the debt quickly but you’ll also be motivated.
The bottom line
Getting out of credit card debt is no easy feat, and paying off the debts can feel daunting. However, with research, an effective plan, and being consistent, you’re only one step closer to becoming debt-free. Of course, nothing beats paying the minimum payments, a wise strategy adopted by a large number of people. Apart from that, you can also get a loan, opt for balance transfers, reduce your spending, and much more.
However, it is advisable to avoid getting into credit card debt as much as possible. They can lead to financial hardships in the long run.