Looking to pay off your credit card and reduce debt? The following tips for getting out of debt can help you efficiently chip away at your credit card balance and help you become debt-free 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 credit card payoff plan in place, stop using your cards 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. Gather all your credit card information in one place, including your online usernames and passwords, your paper bills and the actual cards themselves. Then calculate totals to see exactly how much debt you have, so you can create a plan to pay off your credit cards.
- Budget before the beginning of each month. Create a detailed budget each month of projected expenses and income. This can reveal opportunities to allocate more of your monthly income towards debt. While this may seem tedious, budgeting can make a big impact by showing how quickly little things, like going out to eat, can add up. You should also put a set amount from each paycheck into an online savings account for emergencies.
- Make timely payments. Regardless of how much you can afford to pay toward your debt each month, always send your payments on time. Late payments give creditors the opportunity to raise your interest rate, meaning more of your payment goes toward interest and less toward paying down your balance. So whether you’re paying online or through the mail, give your payment plenty of time to get where it needs to go.
- Make more than minimum payments. After you have a realistic picture of your credit card 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 2% 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.
- Concentrate on paying off cards with low balances or higher interest rates first. Some financial experts recommend that you pay off credit card debt by starting with the smallest balance first. This strategy lets you see immediate success and create momentum. Other experts suggest paying off credit cards with the highest interest rate first. In the long run, paying off cards with higher rates first will probably save you money in accrued interest, but the main goal should be to make strides toward paying off your credit cards. To find out just how much you can save by paying down your various credit card balances, use a credit card payment calculator.
- 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 0% balance transfer offers, making it an easy decision to switch accounts. For example, our Nationwide Bank® Visa® Credit Card offers 0% interest for the first six billing cycles, giving you time to pay off your balance and reduce your credit card debt before the introductory period ends.
- 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.
- Consolidate your debt. For homeowners who are looking to consolidate their debt, a home equity loan or line of credit could do more than lower your monthly payments. Using a home equity line of credit could also lower your interest rate, as well as offer potential tax benefits.
Paying off your credit cards is no easy feat. However, it is possible to reduce credit card debt when you make smart choices with your money. Call Nationwide Bank today to learn about low introductory APRs and balance transfer rates.