Eliminate Your Credit Card Debt in 5 Simple Steps
Have you ever noticed the statement that reads on the small box on your credit card statement? For those who have not given that note much importance, majority of those people have large debt amounts on their credit card and this has been validated from the statistical figures. However, the small box reads minimum payment due. This basically indicates that you pay a small or even the minimal amount so that you can be off the hook with respect to the entire bill, but only for a temporary time span. Unfortunately more than 45% of Americans carry a balance every month. But little do they realise that this rotating charge comes back only to bite them hard.
Sure you have a trillion reasons to fall into a financial debt and thus end up paying a high interest debt. The cause could be a sudden loss in job, a medical emergency at home or even a heavy purchase that was completely unavoidable. Whatever be the reason, the high interest amount will not cease and you need to pay up. So paying off the high interest debt should top your priority list at all times. Paying off is not an effective solution. On the contrary, you need to chalk out an action plan that will not only help you to pay off, but at the same time will assist you reduce the high interest and eventually eliminate the debt. There are several steps to eliminating credit card debts. Let us take into account the 5 most common and effective ways to bring it down.
- Focus on One Credit Card at a Time – For people using more than one credit card and having remaining balance in all the multiple cards can be very chaotic. The best way to deal with this situation would be by accumulating the debts from all the credit cards into one card. This process can be easily defined as credit card debt consolidation. Transferring the amount into one card will allow you’ll to keep track of the same and channelize your ability to pay off the debt in a smoother and simpler way. However, this might also imply that the rate of interest will get higher because of the large sum of money that your credit card has. In such cases, what should be done to cut down the high interest rate? If you wish to know that, then refer to the next point.
- Negotiate with Your Creditor for a Lower Interest Rate – It is always important to have good terms and equations with your creditor. Since he is the key person who can make or break the situation by helping you swim through the troubled waters or make matters worse for you. Having a good relationship with your creditor gives you the edge to negotiate with them so that they can cut down on the high interest rate. Paying off the debt at a lower rate of interest always acts to your advantage.
- Remember to be Cautious While Transferring Your Balance – The temptation of moving the remaining balance from a credit card that has a high interest rate to another credit card that has a lower interest rate is extremely irresistible. Taking this decision to transfer the amount is also the right thing to do because through this balance transfer you get to save a lot of money that is no longer going as interest amount. But be careful about the balance transfer because the interest might be low, but you need to make sure that the instalments are being paid regularly month after month without fail. Failing to pay the instalments can increase the interest rate. And as luck would have it, the interest rate can increase to a figure that is much higher than what you used to pay before the balance transfer.
- Peer-to-Peer Lender – Life would have been very kind and generous to you if only you could pay off the entire debt in one breath and be free for good. Unfortunately life is not a bed of roses and that is the reason why you need to pay them on a monthly basis. However, there can be instances where you can rely on the peer-to-peer policy of taking money in order to pay off the debt. They are secure sites who offer loans within a small yet fixed rate of interest which is much lower than what you get from credit cards.
- Make a Minimum of Two Payments Every Month – Credit card issuers usually charge the interest on a regular basis. This implies, the faster you pay the amount, lower will be the interest rate on the sum total. In your attempt to cut down on the interest rate, many people opt for making two payments in every month. It can be small payments, but a payment nonetheless gets you closer to wrapping off the debt at the earliest.
These are some of the most commonly used steps that people undertake to set things rolling and wrap up their debts in a smoother and faster way.