In Debt? Six Strategies to Help You Pay Off Credit Card Debt
Most people understand the difference between good debt and bad debt. For example, a mortgage loan is considered good debt. However credit card balances are generally considered bad debt.
According to a study done by CreditCards.com in 2012, the average American household with at least one credit card has nearly $16,000 in credit card debt. If you find yourself in this group and wanting to pay off your credit card debt, you’re not alone. Here are six strategies to help you reduce your credit card debt once and for all.
- Stop using your credit cards. It may seem like a simple solution, but for many, it’s a hard practice to put into place. Credit cards makes it easy to overspend and even easier to avoid paying off your balance entirely. So, before you put a payoff plan in place, stop using your credit card for any more purchases. That might mean spending less and creating a budget to avoid the need to swipe that credit card.
- Get a realistic picture of your debt. Once you’ve put away your credit cards it’s time to get a clear picture of how much debt you actually have. Gather all of your credit card information in one place including your online logins and passwords, your paper bills and the actual cards themselves. Then you can calculate totals to see exactly how much debt you have in order to begin creating a pay off plan.
- Make more than minimum payments. After you have a realistic picture of your debt, it’s time to get down to the business of paying it off. The truth is, if you simply make minimum payments on your credit cards (which is usually only two percent of your entire balance), you’ll barely make a dent in your debt and end up paying a lot more money over the long run than you originally spent. But before you go and increase your minimum payments on all cards equally, read the following tip.
- Pay the highest interest rates first. Find the card with the highest interest rate and pay that one off first. Continue paying the minimum on your other cards, but pay as much as you can every month on the highest interest card. When your highest-interest card is completely paid off, you can move on to the card with the next highest interest rate. This will help you pay off your debt as quickly as possible and while paying the least amount of interest.
- Request rate reductions. It may seem strange to call your credit card company looking for a rate reduction, but it certainly isn’t a waste of time. While not all lenders can offer this incentive, some companies will lower your interest rate to keep you as a valued customer. When you call, be polite yet firm as you request a lower rate. If they’re unwilling to work with you, don’t hesitate to let them know that you’re considering transferring your balance to another credit card company willing to offer you a lower rate. This may incentivize them to honor your request.
- Take advantage of low balance transfer offers. If your current credit card company isn’t willing to decrease your current interest rate, it’s a good time to find another lender with better rates. Many companies offer low or even zero percent balance transfer offers, making it an easy decision to switch accounts. For example, our Nationwide Bank Visa® credit card offers zero percent interest for the first six billing cycles, giving you ample time to pay off your balance before the introductory period ends. Our online credit cards are a great way to get ahead and make your hard-earned money work even harder for you.
Paying off your credit cards is no easy feat. However, it is possible when you make smart choices with your money. You’ll be debt free in no time when you follow these six strategies to pay off your credit cards. So, call us at 1-866-439-3206 to take the first step toward eliminating your debt today.
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