Credit cards can carry high interest rates. And if you owe a lot of money on your cards, it can be difficult to pay off your $ 0 balance. The good news is that there are some techniques that can make the process easier.
If you’re having trouble paying off what you owe on your cards, try these tips to help.
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1. Consider refinancing your credit card debt
Credit card debt can be very costly debt because it is common for the interest rate on cards to be over 17%. The more credit card interest you pay, the harder it is to pay off what you owe because so much of your monthly payment goes directly to the creditor rather than reducing your balance.
You may be able to lower your interest rate by refinancing your credit card debt. You might consider a 0% balance transfer card, which would allow you to pay a small fee to transfer your existing balance to a new credit card offering a 0% promotional rate for a period of time. You can also check to see if a personal loan could be offered to you at a lower rate than what you are currently being charged.
By refinancing, you can often reduce your total repayment costs, your monthly payment, or both. It is a great solution to facilitate the payment of credit card debts.
2. Take a paid approach
There are a few proven methods of debt repayment, including snowballing and flooding debt.
The debt snowball method involves paying extra on your credit card with the lowest balance first while making only minimum payments on other debts. Once your card with the lowest balance has been fully paid off, add the amount you paid on it to the monthly payment on your card with the next lowest balance.
The Debt Avalanche Method takes a similar approach, but you start by working on the debt with the highest interest rate first and then work backwards from there. The advantage of this approach is that you save more by getting rid of your most expensive debt first. But the downside is that you won’t necessarily get quick wins by paying off your debt right away – so it can be harder to stay motivated.
Establishing a repayment plan can help you take a more organized approach to paying off your credit card debt, which can make the process a lot easier.
3. Focus your budget on paying down debt
If you want your credit cards paid off, make that a priority when creating a budget. Plan to send as much extra money as possible to your creditors, including temporarily diverting money from other types of non-essential expenses.
A small, short-term sacrifice can make a big difference when trying to pay off your credit card debt.
4. Talk to your creditors about your options
Sometimes none of these approaches will work for you if you’re struggling to make minimum payments or don’t have the extra cash. If this is your case, talk to your creditors and let them know that you are in trouble. They may be willing to work out a payment plan, especially if they think you might otherwise default.
By following these steps, you can find the best approach to dealing with your credit card debt and hopefully make the process of dealing with that debt much easier.