Credit card debt is annoying; more so when you have realized the result of using credit cards irresponsibly but you cannot do anything to prevent it from happening. However, you can do something to repay the debt quickly and avoid throwing money on the interest payments on credit cards. Go through this article to know how you can avoid throwing money on paying credit card interest.
- Know exactly what you owe to your creditors – To get out of debt, the first thing you need to do is know exactly how much you owe to your creditors. To do so, gather all your bills and calculate how much you owe to your creditors. Even if there’s lot of debt to pay off, do not worry, at least you have taken the first step to clear all your dues.
- Do not incur any more penalties – Before you plan a suitable strategy to pay down your debts, your first concern should be to not incur any more debts and to make timely payments. So, make sure you do not forget to make at least the minimum payments on each of your cards while trying to get yourself out of debt, completely.
- Stop purchasing with credit cards for the moment – When the debt is skyrocketing, you will also have to stop using your credit cards to buy things, for the time being. Resist the temptation of using your cards whose limits you haven’t reached yet. Keep your remaining credit limits for emergency purposes. Use cash to buy items till you repay your debts in full.
Now that you have stopped using your credit cards and got exact knowledge regarding your outstanding dues, it is the time to plan a suitable strategy or a mix of strategies, whatever works in favor of you.
- Opt for making bill payments bi-weekly –You are lucky if you’re one of those who get salary twice a month. You can opt for making bi-weekly payments towards paying off your credit card debts. The point is to use your money to repay debts before you spend the dollars on something else.
- Try to repay your highest interest debt – Though there’s a debate regarding which strategy is the best – debt snowball or debt avalanche, yet the latter is considered to be the better one in terms of saving money on making interest payments. In case of debt avalanche, you make extra payments on the card with the highest interest rate while continuing making minimum payments on the other cards. Therefore, in the long run, you may take a longer time to repay your first credit card and it may become harder to stay motivated in the process, yet you save a lot on the interest payments. On the other hand, if you start repaying with the smallest amount of debt, as in case of debt snowball strategy, it is easier to stay motivated since you can see results fast. So it is up to you the strategy you want to choose.
- Balance transfer may help you – When you have several debts to deal with, it becomes easier to transfer some of your debts to one card and that too, to a relatively low interest one. By doing so, you actually replace your higher interest debts with a low interest one. You may also take out a low interest card if you qualify for one. However, if you’re lucky to get one, make sure you check the date till when the low interest rate is valid as you need to pay back the entire amount within that date; or else, you will have to pay lot of interest on the remaining amount.
While going through this article and planning a suitable strategy to repay your credit card debt, you might have begun thinking that credit cards are bad. However, it is not true. Credit cards can be your best friends only if you know how to manage them properly. Credit cards help you establish a credit history and to repair it after you have struggled to come of debt. So, once you’re out of credit card debt, give yourself applause and start using your credit cards to add positive items to your credit report in order to reduce the effect of negative ones. You can start doing this by using your credit cards for some purchases and paying the entire bill at the end of every billing cycle. Doing so, with time, you will watch your credit scores to increase and you will soon qualify for credit cards and loans with suitable interest rates and you will also put a step forward to build a good financial life ahead.