Do you own credit cards?
Do you want to pay off credit card debt fast?
Debt either small or big makes a hurdle in the completion of your dreams. And plastic money aka credit cards makes you spend more and get in debt.
Getting rid of credit card debt can provide immense relief.
Because carrying a high-interest-rate debt is stressful, this unsecured loan can put a strain on your finances and can suck your savings.
Then, what is the solution to getting rid of this high-interest debt? Is this possible to pay this debt quickly and easily?
The answer is yes, it’s possible to pay off your credit card debt, but you just need a plan.
In this article, we’ll learn how to build the foundation for reducing your credit card debt.
These are some basic and quick implementable tactics to pay off your credit card debt fast.
By following these I’m also able to pay more than my regular amount (minimum and EMI) for my 12000$ debt.
Tips To Pay Off Credit Card Debt
) Plan Your Budget For Debt Pay off
Planning your budget is the most important part of paying off debt.
It looks quite simple while thinking but trusts me this is the hardest part of your pay-off credit card debt journey.
This step will help you to find your all expenses and a way to give a cut and save some extra money.
One way or another, you need to find a way to make sure your monthly income is more than your expenses.
This budget planning will give you benefit in two ways:
- You can avoid adding to your debt.
- You can put that “extra” money toward paying down loan balances.
Now you can choose the option to either increase your monthly income or lower your monthly expenses.
Your income, expenses, and budget depend on a variety of factors, including your job, family situation, and health.
Creating a monthly budget that works for your needs is the first step toward becoming debt-free.
Read: How to save money with credit cards?
2) Debt Snowball
Debt snowball: Pay off the loan with the smallest balance first.
The debt snowball is a debt-burning strategy that helps you build momentum as you eliminate credit card debt.
The debt snowball is a psychologically rewarding strategy because it provides a boost of confidence each time you pay off a debt, creating a series of quick wins.
To use this approach you need to make a list of all your credit card debts. Then order it by the size of your debt balance, from smallest to largest.
How Does Debt Snowball Strategy Work?
- Pay the required minimum payment on all of your credit cards each month.
- If you have any extra money available, pay it toward the card with the smallest balance.
- Repeat each month until you’ve paid off the smallest balance.
- Now follow the process for the next smallest balance—that’s your new target. Try to pay any extra money toward this balance, including the amount you used to put toward the balance you’ve already paid off.
- Repeat as needed.
Every month the amount you pay toward each balance gets larger since you are paying the minimum payment plus the amounts you used to pay toward other cards.
Your payments ‘snowball’ until you’re debt-free. And since you start with the smallest debt, it shouldn’t take too long to get that first win.
3) Debt Avalanche
The debt avalanche strategy helps you reduce the total amount of interest you will pay as you eliminate your debt.
In the debt avalanche strategy instead of balance, you will focus on the interest rates.
How does the Debt Avalanche Work?
- Make a list of all your all credit card debts, and order it by their interest rates. The card with the highest rate should be at the top of your list.
- Continue making the required minimum payment on each balance.
- If you have any extra money available, pay it toward the balance with the highest interest rate.
- Repeat each month until you’ve paid off that high-interest-rate card.
- Shift your focus to the balance with the next-highest interest rate. Put any extra money toward this debt, including what you used to pay toward the balance you just paid off.
- Repeat as needed.
Because in a debt avalanche you will focus on higher interest first so you might not build momentum quickly.
4) Use 0% Balance Transfers
Some banks or credit card issuers offer you a low APR Balance transfer facility.
You can use these special benefits to transfer your high-interest credit card debt to a new card.
This technique will give you a temporary benefit as you can avoid your high-interest charges only for a few days (30 To 90 days).
But make sure you have checked the fee and charges for the Balance Transfer. These charges can reduce the benefits of transferring your debt.
Read: How to select your credit card?
5) Debt Consolidation Loans
If you don’t have any luck with 0% Balance transfer card offers, a credit card debt consolidation loan could help.
Yes, If you can find a personal loan with an interest rate that’s lower than the one on your credit card, you can save on interest each month.
As credit card interest rates are the highest interest on any financial product, you can find a low-interest Personal loan easily.
Always try to get the amount that can pay your all credit card debt.
The new loan EMI can be higher than your card’s minimum amount but you will save on higher interest and penalties.
Every bank and NBFC has different eligibility criteria for a Personal loan, so try to get it before your credit score gets down due to credit card debt.
Optional:
These are the options you can use only if there are no above-given options available to use.
Because these options can cost you to lower your credit score or your only savings.
Credit Card Settlement :
This is the tactic you can apply if you are unable to pay your credit card dues.
Generally, banks and other card issuers don’t encourage this.
After sharing your financial conditions you can negotiate with the card issuers and the issuer gives you an option for settlement of your all credit card debt.
You should consider the settlement as the last option and still, there are chances that the bank can deny it or you can’t make the settlement lump sum payment.
The card settlement amount ( debt percentage) depends on the issuer ( Bank/ NBFC) and your negotiation skills.
But going with this option can lower your credit score drastically and you will not be able to apply for a new card or loan in nearby future.
Read: How to Increase Your Credit Score Fast?
Pay From Savings For Fast Relief
This option would cost you more as you will lose your savings.
If you can’t go with the other strategies yet want to pay all your credit card debt. Your savings can help you.
Sometimes losing your job or business loss can be the reason for your credit card debt.
Not paying the bill on time will increase your balance and lower down your credit score.
Also if you don’t have any income source you won’t get the Debt consolidation loan easily.
In such conditions, you can use your savings (if you have one) to pay the balance.
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