How does someone get rid of their credit card debt that keeps piling up? You may feel stressed out from all the lenders calling you and trying to collect on the debt. What can you do to handle credit card debt in a way that makes sense? We’re going to look at the ways that you can make it out of debt and back into financial freedom again. Based on information from the 2018 American Household Credit Card Debt Study, researchers learned how the average American household has up to $15,000 in debt.
Understand Credit Card Debt and Interest
Before you can ever break the chains that bind you to credit card debt, you should first have an understanding of how it works. Depending on the credit card, you normally have 21 to 25 days from the date of your purchase to pay off the debt. Interest gets calculated based on the balance. For example, let’s say that you have a $2,000 bill. Meanwhile, the interest rate sits at 18 percent. Next, let’s say that you pay $500 on the 11th, and you pay another $500 on the 22nd. The interest means that you will pay $22.05 in interest.
Pay More Than the Minimum
Many times, you will see a minimum amount due, and we recommend that you don’t even pay attention to the minimum because if you truly want to get out of credit card debt, you need to pay more than the minimum. The problem with only paying the minimum comes from how the debt never gets touched, and it continues to rack up interest against you. Instead, we recommend that you pay off your credit card debts in full. In doing this, you never have the chance to have debt pile up against you. You reap all the benefits of a credit card like building your credit without suffering the negatives.
How to Pay off Debt Quickly
For those who have credit card debt, they can pay it off more quickly when they pay it off in the order of the interest rate. For example, pay off the debts with the highest interest rates to keep yourself from going deeper into debt. In this way, you will lower the interest rates paid and keep from having to pay above and beyond what you don’t already owe. You will build momentum when you do it in this way.
No Fast Answers
One of the first things that you need to understand about credit card debt is that there are no fast answers when it comes to this. The only way that you can make debt disappear is through paying it off. That will help you to become debt free.
Here are some of the ways that you can eliminate your credit card debt and be free from your lenders:
- Use your savings account.
- Set up automatic payments.
- Increase earnings, decrease spending.
Consolidate Your Debt
Debt consolidation means taking your current debt and putting it all on a single loan that you can pay off more easily. Another one of the good things about this method? You put all your debts into a single loan so that you only have one interest rate to worry about. This has proven a powerful method because of how it organizes you to pay off your debts in a way that feels more manageable. Not to mention, you can sometimes get a lower interest rate through debt consolidation than what you can through other methods. You have a couple of different options for debt consolidation that include:
- P2P Loan
- Personal Loans
Getting the lenders off your back becomes about paying off any debts that you might have. If you’re up to your shoulders in debt, it’s time to create an action plan that will help you to eliminate your debt problem. While incomes have been growing, costs have continued to rise with incomes, and this has made it even harder to survive. Credit card interest is costly, and you want to take care of the problem as quickly as possible.