Credit card debt is a burden that many people face, but there are ways to lighten the load and ease the strain of monthly interest payments. It can feel like an endless cycle, but there are ways to escape from it. Here are six ways to quickly pay off credit debt and release yourself from the shackles of bank payments.
1. Pay More Than One Month at a Time (or More Than One Time a Month)
Paying more than you typically owe can help drop the overall sum of interest payments you fork over to the credit card company in the long run. The interest on your balance compounds daily so by paying more each month or more often each month, you can save significant cash. Skip that extra coffee or after-work treat a few times a week. Or try and curtail another pricey habit to see if you can scrounge up some extra savings.
It’s counter-productive to pay more than you need to on interest payments. If you pay more than the minimum balance each month, you’ll watch the interest you owe over time (which is just unnecessary fees to the bank or credit card company) dwindle. The faster those go down, the more money you will have to spend on things you actually want.
This strategy is especially important if the Federal Reserve eventually raises the interest rate. Aim for a small credit card balance so you can pay off debt faster and save more cash. Consider making weekly, rather than monthly payments, to pay off as much as you can. If you’re tempted to spend the money currently in your pocket, pay off your balance online the minute you get your paycheck. The lower your debt, the easier it is to bring your credit score back up. For extra motivation, write down how much you pay in interest each week. As you watch that number go down, you will start to find your financial mood begins to perk up!
2. Never Miss a Payment Date
Missing a payment date is a big no-no since you’ll be covering extra finance charges as well as a late fee penalty. To encourage you to pay it on time, set alerts on your phone and via email so that you won’t forget. Put aside a few dollars every day to use for your payment. If you do slip up and miss the payment date by a day, quickly log into your account or visit the bank to pay up. The sooner you pay the balance in full, the less interest you have to pay.
3. Consider a Balance Transfer Credit Card
This is why you want a high credit score because balance transfer credit cards start out with 0% interest rates for as many as 18 months. This means you won’t be paying interest and can take more time to earn enough money to pay off your debt once and for all. It’s like a fast-track pathway to getting rid of debt (provided you don’t keep spending money you don’t have). Just remember, you need to improve your credit score before you can qualify for such a card. And to do that, try and pay more than your minimum balance each month and always on time. Just make sure any card you apply for has low balance transfer charges (or none at all) so you don’t keep paying the bank unnecessary money to cover your debt.
4. Cut Spending
This is a no-brainer, but it can be a difficult behavioral change. Make a budget and stick to it. Look at your daily and even hourly habits to determine where you can shave off spending. Then, take those savings and immediately consider that they belong to the bank. You’ll be surprised at how fast you can accrue cash by slashing extra expenses. That morning coffee? Skip Starbucks and make it at home. That’s an immediate $3 savings, and if you do that for five days a week, that’s $15 per week or $60 per month. How many other habits can you change to scrounge up the money you need to pay off credit card debt once and for all?
5. Pay High-interest Cards or Those With High Balances First
Take a moment to study the different interest rates on every card that you carry debt on so that you know which ones to pay off first. You’ll want to get rid of any dept on cards that are charging a higher rate first to expedite your savings. If one card charges 3% and another 5%, the latter should be your priority. The same focus should be given to cards that carry high debt balances. Even if the interest rate is lower, you may still be paying quite a bit each month given the high amount. You’ll want to use your calculator to decide which card should be paid first. The answer: the one that carries the highest interest rate each month.
6. Personal Loans
If you can’t get a balance transfer card or have trouble producing enough savings each week to pay more than the minimum balance on your card, there are alternatives. Online lenders or local banks may consider offering a loan so that you can immediately pay off the credit card balance in full. While you will still owe money to the bank, the interest rate for a personal loan is sometimes cheaper than those of credit cards. If you have multiple credit cards, each with its own interest rate, just paying one interest rate to the bank for your personal loan cuts back on the amount of interest you owe. If you must carry debt, you want to find the lowest “cost-to-you” debt you can find, and that can easily be through an online lender or local bank.
More Ways to Deal with Credit Card Debt
Utilize cashback and rewards programs to offset the cost of your purchases. This can include traditional systems like air miles on a credit card, brand-specific loyalty programs, and new innovations like rewards phone apps. Phone apps like Fetch will help you save money by giving you free gift cards for scanning your receipts. Free gift cards mean less credit card debt, making it easier to balance your budget and get out from under credit card debt. Get started today by downloading the app from the links below: