Drowning In Credit Card Debt? We May Be Able To Help
Weighed down by credit-card debt? In this article, you will learn the most effective strategies for clearing out… even a sky-high balance.
1) Find the best payment strategy for you
If you find yourself in a situation where you really need to handle your credit card debt, consider these approaches for you to your goal quicker. Having a definite repayment goal and plan will help keep you, and your credit card debt, in check.
- Pay more than minimal:
Credit card issuers provide you with a convenient monthly minimum payment, generally 2% to 3% of the balance, to ensure that you’re making timely payments. Nevertheless, banks make cash off the interest that they charge every pay period, so the longer it takes you to cover, the more cash they earn.
- Debt snowball:
With this method, we also call this the snowball strategy. You start by prioritizing your loans by quantity, focusing on the smallest one first. When you have paid off that loan, you roll that payment to the amount you’re contributing toward your next smallest loan, etc. Like a snowball rolling down a hill, you will slowly make bigger and bigger payments, finally eliminating your debt.
- Debt avalanche:
like the snowball strategy, an avalanche strategy swaps your priorities. Rather than paying off the card with the lowest balance, you pay off the card with the highest interest. It tends to be a quicker, and more economical, method than snowballing. Also, over time, you will find yourself easing up on the payments.
- Automate your payments:
Automating your payments is an easy method to ensure that your debts are being paid so that you avoid racking up extra costs in late fees. If you are practicing a debt snowball or debt avalanche strategy, however, you’ll need to be a little more hands on to be sure that you’re contributing exactly what you would like to each account.
2) Debt Consolidation
There are services to help you consolidate all your debt into one amount. This way, you only need to make 1 payment each month to chip away in the balance.
- 0 percent balance transfer credit card:
It may seem counterintuitive to apply for a credit card once your main objective is to escape credit card debt, but 0 percent balance transfer cards will help save you cash in the long term. Find a card that provides a long 0% introductory period – preferably 15 to 18 months – and then move all your outstanding credit card debt into that 1 account. You will have one simple payment every month, and you won’t pay interest. This also helps you to have a ease of mind, knowing that you just need to focus on that one single payment, instead of having many letters shoved down your letterbox!
- Personal loans:
Likewise, you can take a fixed-rate private loan to repay your debt. Though you’ll need to pay interest, interest rates for personal loans are usually lower compared to credit cards, which can still help you to save a little additional cash.
3) Go Straight To Your Creditors
Reach out to your creditors and attempt to negotiate payment terms, like advocating for a smaller minimum payment or lower APR.
If you are a longtime customer that has a fantastic history of payments, a creditor may be willing to work with you. Describe your situation and the measures you may need to take.
Small changes may be just enough to help you to get a handle on your debt, and what’s the worst that can happen? If they say no, then at least you know you tried and you just need to find another way!
4) Desperate times… Desperate measures
If the whole amount you owe is more than you can pay every month and you are really trying hard to get your debt in check, it could be time to take some more serious actions.
Consider debt relief alternatives, such as bankruptcy or a debt management program.
- Debt management strategy:
Debt management programs are made with the support of a nonprofit credit counseling agency. You will then pay the counseling service a fixed rate every month. Your credit accounts could be closed, and you might need to forgo new ones for a time period.
- Debt settlement:
Under debt settlement, a creditor agrees to accept less than the amount you owe. Even though it may sound like a good deal, it’s not an option that’s available for most people. Typically, you hire a debt settlement company to negotiate with your creditors on your behalf
- File for bankruptcy:
This should be your last option… if there’s really no way out. Even if it comes to this, look at things positively. Your past does not define your future, and even if you are bankrupt now, there’s always room for you to rebuild yourself up again!