Credit card debt seems like a never-ending issue, especially if you have to take out a high-interest card. Although credit cards can make it easier to pay for an emergency, they’re also set up to make it take much longer to repay, especially if you only pay the minimum balance each month. Credit cards might seem like a quick fix to a financial crisis, but credit card debt could create a larger financial burden.
For example, let’s say that you charged $1,000 to a card with a 20.99 APR. Your minimum monthly payment is $25, but you’ll pay around $17.40 in interest. It’s going to take you a long time to pay $1,000 if you’re only paying approximately $7.60 toward your principal balance monthly.
How Can I Pay Off My Credit Card More Quickly?
Creditors love to keep their cardholders in debt. Fortunately, there are a few things you can do to get out from underneath a massive credit card bill.
1. Always Pay More Than the Minimum
Paying the minimum balance will end up making it take an extremely long time to pay off a credit card. Instead, pay as much as you can above the minimum balance. Even if you only come up with an extra $10 a month, it’ll make your principal balance go down much more quickly.
2. Put Bonuses Toward Your Debt
Do you have a quarterly or annual bonus? Instead of spending it frivolously, commit your bonuses to paying off your debt. When you make a major payment to your credit card such as $500 or $1,000, it will not only help you but it’ll also provide a psychological benefit. Remember: Ensure that you also pay whatever amount you’ve been paying monthly to get an extra boost.
3. Utilize the Snowball Method
If you’ve got more than one credit card, select the card with the lowest balance. Focus on paying it off by putting as much as possible toward the balance. Meanwhile, pay your minimum balance on your other cards. Once you’ve paid off the first card, repeat this tactic for the second lowest balance and so forth.
4. Transfer Your Balances
Take advantage of transfer balances to cut your interest rate. Although they might charge you up to a 5% fee, they’ll also typically offer a low or zero interest rate for up to 18 months. This provides a lot of relief and makes it much easier to pay off your debt.
5. Speak to a Debt Relief Expert
Sometimes, no matter how much you try to repay your debts, it becomes impossible. Rather than letting your debt destroy your credit rating, contact a debt relief expert instead. They’ll be able to negotiate a smaller balance with your debtors on your behalf. Your credit line will be closed, though.
Getting into credit card debt can leave you unable to relax. This problem becomes exacerbated if you need to rely on your card to pay off your monthly bills. Rather than getting into a never-ending loop, it’s better to pay off your cards quickly and begin using cash for everything.