Strategies for Getting Rid of Credit Card Debt
Credit card debt can be overwhelming. It’s also very common. Credit card debt is easy to get into, but tough to get out of. Credit cards are convenient and easy to use. Unfortunately, it’s also easy to lose track of your spending when you’re using them. This means that, if you’re not careful, you could wind up with a large amount of debt and even potentially put yourself in a financial situation that you can’t handle.
Another problem with credit cards is their interest rates. They’re almost always very high. This means that, if you can’t pay the balance in full every month, the debt quickly grows. The more it grows, the harder it becomes to pay off and it keeps going like that.
However, the situation isn’t hopeless. There are ways to get rid of credit card debt. Here are a few strategies that may help you.
It’s less convenient and it requires more budgeting, but try to use cash whenever possible. Doing so will mean that you can only spend money that you actually have, rather than adding on more credit card debt.
In order to use cash successfully, you’ll need to create a monthly budget. Write down how much you make in a month (use the amount from last month, for example). Only include your regular income, not possible bonuses. Then write down all of your expenses. You may need to spend a month keeping track of everything you buy in order to figure out how much you spend and where you spend it.
Your goal is to ensure that you have enough money to last you through the entire month. In order to do so, you might have to make some cuts. Look over your expenses and see where you can reduce or eliminate some things. For example, making your meals at home instead of going to restaurants can save you a lot of money if you are used to eating out frequently. You should also be able to save some cash by reducing your cell phone plan, modifying your cable package and reassessing how much you spend on food, clothing and entertainment.
Write Down your Debt
Many people might be unaware of how much debt they actually have. Others may know the numbers, but they aren’t quite sure of the particulars. How much do you owe on each card? What are the interest rates? What is the minimum payment? How long will it take you to pay your debts down at the current rate? Figure all of these things out and write them down. This will help you get a better picture of your debt which will make it easier to manage.
Some credit card companies will let you transfer your debt from one card to another. This can be helpful if you have one card with a very high interest rate and another card with a lower one. For example, transferring your debt from a card with a 20% interest rate to one with a 5% interest rate can save you some money. You’ll need to have credit available on the 5% card in order to do this, however.
Come up with a Strategy
In order to pay down your credit card debt, you’ll need to have a strategy. There are a few different schools of thought when it comes to paying down credit card debt. Two of the most common are:
Paying the cards with the highest interest rates first
The goal of this method is to reduce the amount you spend on interest. In order to do this, you will need to rank your cards by interest rate. You will then pay the minimum on all cards except for the one with the highest interest rate. You then pay as much as you can on the high interest card until it’s paid off. Then you move on to the card with the next highest rate.
Paying the smallest balances first
The goal here is to pay off cards more quickly, allowing you to feel accomplished when a card is paid off and stay motivated. With this strategy, you pay the minimum on all cards except for the one with the lowest balance. You then pay off as much on this card until it’s paid off. This strategy won’t save you any money, but it will make you feel better as you reduce your credit card debt and provide you with the motivation you need to keep going.