Four Ways to Deal with Credit Card Debt
If credit card debt is piling up, you need to seriously start thinking about ways to deal with it and get back on financial track. This article offers some advice about how to tackle your debt and reduce it.
If you find yourself struggling with credit card debt, rest assured that you are not the only one. The average U.S. household credit card debt stands at $15,270. Unfortunately, there are no quick solutions to magically fix your financial troubles. You need to take control of the situation, come up with a payment strategy, and stick to it until you become debt-free. Here are some tactics that will help.
Make a Clear Payment Plan #
Start by making a list of all your credit cards. You can order them by interest rate (highest first). A good idea would be to start directing your efforts towards paying as much as possible for the first card on your list, while still managing to come up with the minimum payments for the others. When that card is paid off, don’t back down. Move down the list and apply the same tactic for the second card.
Transfer Balance to Another Card #
Credit cards allow you to transfer your credit card balance to another card. If you have a high interest card with a small balance, consider transferring it to another card that offers a zero-interest balance transfer. You will still need to pay off the debt before the balance transfer expires, but you can save good money on interest this way.
Consolidation Loan #
When you are in serious trouble with high interest rates and high monthly payments, a debt consolidation loan might help. This kind of loan lets you repay your debts to all your creditors at once. Consequently, you end up with only one monthly payment, often at a lower interest rate than you are paying now. However, avoid getting a loan that lowers your payments only by extending the repayment period, as you may end up paying more interest over time.
Approach a Counselor #
If you believe you need help coming up with a wise payment plan, look for help at credit counseling centers. A counselor will analyze your current financial situation and come up with possible solutions to get out of debt. They can also negotiate on your behalf with the credit card companies.
Whichever tactics you use for reducing your debt, the first thing you must do is to stop relying on your cards for purchases. You should be able to cover your monthly expenses from your checking account and still afford to pay off some debt. The first step: stop using your credit cards. Keep one for emergencies and cut or hide the rest. Good luck!