Being in credit card debt can be very stressful. The interest rates on the debt can be so high that you might find yourself unable to pay back the debt if you miss just a few monthly payments. As such, most financial advisors will usually advise you to pay off your credit card debts as soon as possible. And if you are looking for ways to do this, then you will definitely find the below tips useful.
Get A Personal Loan
If you have multiple credit card debts, then the easiest way to deal with them is to pay off all such debts by taking a single personal loan. So, if you have three credit card accounts with outstanding debts of $3000, $8000, and $5000, take out a personal loan of $16,000 and pay off all the three credit card balances. This way, you will only have to focus on paying of a single debt, which will clear your mind and help you properly plan out your repayment. In addition, you may also end up with paying a lower interest rate on the personal loan as compared to the high interest rates on the credit card debts. So, compare personal loans from different lenders and select the one with the lowest rate as soon as possible.
Stop Using The Card
The best way to get out of an addiction is to stop indulging in the addiction right away. The same is true with credit card debt. Most people end up in credit card debt largely because they are obsessed with shopping. As a consequence, they tend to buy whatever gets their fancy when they have the card with them. As such, it is recommended that you stop using your credit card as soon as possible. Avoid taking them with you whenever you travel. Pay for everything in cash, or through your debit card at best. This will stop you from accumulating extra credit card debt, thereby making repayment of existing debts much easier. However, if you wish to carry a credit card for emergency situations, make sure it only has a limited balance sufficient enough to meet such emergencies.
Set Up A Strict Budget
You also need to start cutting back on your expenses. Only by reducing your existing expenses can you start saving enough money to pay back all the credit card debt. So, start developing a strict budget where you clearly detail your monthly income and expenses. Try to limit your expenses to about 70% of your income so that you at least have 30% left to pay for your debts. And if you follow the budget, you will be able to pay off all the credit card debts very soon.
Prioritize Clearing The Expensive Balances
A good way to pay off your credit card debts is by ranking them from the highest interest to the lowest interest one and ensuring that you make the minimum monthly payments on each card. And if you have any excess cash, apply it to the balances that have the highest interest rate. This gives you the best chance of getting rid of your credit card debts.
In case you have an excellent credit score even though you have large credit card debts, then you should seriously consider doing a balance transfer. This will transfer all your existing high credit card debt into a new card with a lower interest rate. As such, it will become easier for you to pay off these debts. Remember to look for balance transfer offers from banks that come with little to no fee. Plus, do keep in mind to avoid any new purchase on the card since such purchases are likely to come with the regular, higher interest rate.
Avoid New Debts
Finally, ensure that you never ever take any additional debt until the credit card debts are paid off. Extra debt will only put excess pressure on you and can even derail the repayment of the credit card debt. For example, you may have to pay off $400 every month to clear the outstanding card debts. But if you take a new loan that requires you to make an additional $150 debt repayment every month, then you will suddenly have to pay $550 every single month for clearing your debts. If your income has not increased, then you will find it incredibly difficult to manage these debts. And in order to ensure that both debts are paid, you might start skipping a few credit card payments. This can eventually put too much stress on your monthly budget. So, do yourself a favor and avoid taking any new debt until you have cleared off all credit card balances.