There is no magic bullet for paying off credit card debt. Every person’s financial situation is different and each person has their own fiscal responsibilities, like children, college savings, mortgages, student loans or the like. However, there are general strategies one can implement in their financial approach that can put them on the right track to credit card debt-free living.
It is important to remember that not all these tips will be applicable to your situation. The last thing you want to do is spread yourself too thin and exasperate your finances and put yourself in a worse situation than when you started.
Start with Lowest Balance and Work Up
If you are the kind of person that likes to see results fast and enjoying marking things off your list, then this strategy is right up your alley. Focusing on the smaller balances of your debts and knocking those out is not only a great way for you to see progress and stay motivated, but you can also reallocate the funds you were spending on those bills and direct them towards the larger balances.
While you devote larger amount of money paying these smaller balances off, you can pay the minimum payment on your other debts. This a great method to take to build some momentum toward paying off all your bills.
Tackle the Highest Interest Rates First
Similarly, to the previous strategy, this is another divide and conquer approach. Here, attack those credit card balances that have the highest annual percentage rate, or APR, first. By doing so you will not be hit for longer with a high interest rate. By paying the minimum payment for balances with high interest rates, a smaller amount of your payment will actually go towards paying the principle and you will be paying this bill for longer due to that. So, by eliminating these bills first, you free up more money to devote elsewhere.
By enhancing your monthly payment (to whatever amount you can afford) and sticking with that amount until the balance is paid off is the approach. As a yardstick to your progress, keep an eye on the minimum payment, as it gets smaller you know you are making significant strides.
Consolidate Your Debts
Another strategy for conquering your debt is by consolidating your credit card debt to a single card or, if you are feeling bold, consolidate your date into a single loan. The advantage to such an approach is that you will need to only make one monthly payment for your debts rather than a handful of payments.
To add some motivational fuel to the fire, you can transfer the debt to a card that has zero-interest, introductory period. With this strategy, you have a fixed amount of time, typically a year, where your balance does not accrue interest or other charges.
So you can use that grace period to pay off your debt before the introductory time is over, because whenever that period does end the APR shoots through the roof. It’s a gamble to do this, but if you stay motivate you can pay less on your debt.
Curb Your Charging
If you are serious about getting a handle on your credit card debt, nothing is as important as changing your spending habits and how you use your card. It’s far easier to inflate a balance than it is to decrease it. It becomes difficult to pay off a card if new charges are added each month.
Try to put the card you are trying to pay off on the back burner. If there is a purchase that absolutely has to be made, then make sure it is something you can pay off in a month or two.