The average credit balance on a credit card is now close to 6,200 dollars, and the typical American has four credit cards, according to credit bureau Experian. But even if you feel in debt, you can take immediate action to free yourself from monthly interest payments and credit difficulties. With these ten tips on the next page, you can pay off your credit card faster and achieve the freedom you crave.
1. Get Organised
Collect all the information about any credit card that currently has a credit balance. Note the interest rate, due dates, balance, and minimum payment for each card. With all this information, it’s much easier to create a plan and move on.
2. Identify the Card with the Highest Interest Rate
Many people feel overwhelmed by the goal of paying off their credit card debts, especially if they have credits on multiple cards with them. Simplify the situation by identifying the card with the highest interest rate. This will be your starting point. By paying off this balance first, you will save money on interest, which can then be used to repay other cards.
3. Pay the Minimum Balance on All of Your Cards
Instead of trying to make additional payments for all your cards at once, you pay the minimum payments for all your cards, except for the card with the highest interest rate you just identified. By keeping track of all cards, you avoid late payment fees and keep your refund costs low.
4. Pay as Much as You Can on the Highest Interest Card
Let’s say you have three credit cards with credit. On the two cards with the lowest interest rate, you pay the minimum amount per month. However, for the card with the highest interest rate, you will have to pay as much as possible until it is fully paid. If you have paid an additional USD 150 per month, you can apply this USD 150 (plus the amount you paid for the minimum payment) to the card with the next higher interest rate. The amount you apply to the debt snowball on each card you pay for.
5. Analyse Your Spending
If you haven’t tracked your spending in the past, keep records so you can see how you spend your money. After you record each purchase for a month, analyze the results. If you are like most people, you will come across some surprises. If you see your spending shown in black and white, it’s easy to make conscious decisions about your cash flow. If you spend more on food than you thought, you might decide to give up the food until you’ve paid off your credit cards.
6. Create a Monthly Budget
The word “budget” sounds uncomfortable to many, but working on a budget can be liberating. If you know exactly how much you can spend and still stay in the black, you will have less stress and more control over your financial life. How much will you spend on food this month? How much for transport? If you try to pay off your credit cards, you can make adjustments to the budget item to free up more money to repay debts.
7. Stop Using Your Credit Cards
Of course, if you continue to top up the balance on your credit cards, you will always have to contend with debt. So stop using your credit cards for purchases that you can’t immediately repay. If the temptation is too great, do not carry your cards with you and destroy them if necessary.
8. Consolidate Your Credit Card Debt
How simple things? Consolidating your debt to a card or acquiring a debt consolidation loan could be the right strategy for you. Instead of juggling four or five invoices each month, you only need to manage one. Be aware that debt consolidation may involve additional fees. On the other hand, some credit cards offer an introductory period of 0% effective annual interest when you transfer your balance to your card.
9. Consider Drastic Measures
If you are desperately trying to get rid of your credit card debt, you should consider drastic steps. For example, you could sell an asset, such as a second car.B or items in the house that you no longer use. Apply the proceeds to your debts and get rid of a large part in one go. You might also consider using some of your savings to pay off debt, but keep enough savings for bad times.
10. Talk with Your Financial Adviser
If you’re worried about your credit card debt, that’s a great sign! You think about your overall financial well-being and take positive steps for your future. Go one step further by setting up a consultation with an asset advisor. You can discuss your plan to eliminate credit card debt as part of a holistic strategy to improve your overall financial life.