Credit card debt can be a major source of stress. For many Americans, being unable to pay their provider on time is a stark reality. This can lead to plummeting credit scores and even being blocked from future financial opportunities.
While it is easy to argue that people should use credit sparingly, this is more of a personal finance theory. Good advice goes out the window when you need to put food on the table or make other desperate decisions.
That said, if things have started getting out of hand and you’re struggling to pay off what you owe, several ways can make tackling your debt easier. By following some simple methods, you can control your finances and make them more manageable.
In line with this, the following strategies should help you successfully pay off your credit card debt and stay in control of your money.
A budget is your best defense against overspending and not having enough money to pay your credit card provider.
To tackle your credit card debt with speed and efficiency, the initial step is to create a budget that covers all of your basic costs — meaning no more than you need for survival. This spending plan should include major necessities like rent, bills, and groceries so you don't incur new debts while repaying existing ones.
To focus on your credit card debt, you will need to get into attack mode. Dave Ramsey calls this “running like a gazelle” from a predator. In this case, your nagging credit card debt is your predator.
So, if you're struggling with credit card debt, one of the easiest ways to make bigger debt repayment is to cut out luxury purchases.
You might be spending a substantial amount of your hard-earned cash on things that you don't necessarily need. Look over your bank statements and do an honest analysis of your spending.
So, what “luxuries” are we discussing? Subscription services, costly desserts, and regular entertainment. Instead of investing in treats, why not focus on more free or frugal activities? This will aid you in restraining your spending while still having fun.
Credit card repayment plans always have minimum payments. Your budget planning should always start with this number as the lowest possible payment. This will ensure that you don’t underpay any bills and do lasting harm to your credit score.
Now for some bad news. If you only make minimum payments, paying down your debt will take you forever. The minimum payment usually calculates based on your balance and interest rate so the exact percentage will vary. But what doesn’t change is that you will pay a ton of interest.
While focusing on the minimum repayments is highly important, if you want to clear your debt sooner, going slightly above will be a significant help!
Although you are allowed to meet the minimum payment requirements outlined in your contract, paying off any outstanding debts as quickly as possible is recommended.
By doing this, you will save money on interest payments and boost your overall financial well-being.
If seeing the total amount of your credit card bill overwhelms you, start by tackling the smaller debts first. This is a great way of getting ahead and also storing up some positive momentum.
For example, if you have a store credit card where you owe $300, you can focus on paying this off. Removing this from your budget will feel good, and you can put the same energy and funds into the next largest debt. This is referred to as the “Snowball Method.”
Here are the core principles and benefits of the Snowball Method:
Starting with the smallest balance:
The Snowball Method focuses on paying off the smallest balance first and then moving on to the next smallest balance, regardless of the interest rate on each debt.
The benefits of the Snowball Method include:
With each debt you pay off, your optimism and motivation will grow. The important thing is to approach your debt with a plan, and paying off smaller debts in succession has proven to work for many people.
Have you heard of the ability to transfer debt from one credit card account to another? This feature can make paying off your debts more manageable without sacrificing their eventual payoff.
Before trying this out for yourself, be sure to contact your credit card provider and confirm whether or not this service is available.
How does it work? A credit card balance transfer is a process where you transfer the outstanding balance from one credit card to another credit card, usually with a lower interest rate. Here are some key characteristics to help you identify that you are getting a good deal and that you are making a good financial decision:
Ultimately, if you find yourself struggling to repay your credit card debt, what is there to lose? It’s well worth asking the credit card company if they would be willing for you to try this.
Building an emergency fund could be a valuable step during those months when you have a little more surplus income. Rather than spend that extra money, set it aside for a rainy day.
The strategy here is to use this fund to protect your budget during an emergency. For example, if you have an emergency fund with even $500, you won’t need to wreck your budget for a new pair of tires.
Although an emergency fund is not essential, having one at the ready can provide a significant financial safety net in times of crisis. Therefore, if you have recently paid off credit card debt and are preparing to receive another bill, consider establishing an emergency fund as soon as possible. Doing so could help reduce your chances of facing more credit card debt again.
As a final idea, if you need to pay off your credit card loan a few days before your payday, a short-term personal loan could be a viable option to consider.
If you are desperately seeking to pay off your credit card debt quickly, a short-term personal loan may be the solution for you (when managed wisely).
When it comes to personal loans, Simple Fast Loans is a great option for quick cash. The company’s application process is easy, and loans can be customized to meet your needs. Since Simple Fast Loans is 100%-online, so you can get a loan the same business day without leaving your living room.
While taking out a loan to pay back another loan is generally not recommended, it can be a solid option if you can promptly settle all expenses.
Paying off credit card debt doesn't have to be a major problem. However, the best way to ensure your credit card debts remain in check is by keeping a close watch on them and having a plan.
Keeping track of payments and keeping up with repayments will help you stay ahead of any potential financial issues that could arise due to unpaid or late payments.