Tips for Paying Off Credit Card Debt
You opened a credit card to build your credit, help out in an emergency, rack up miles for a vacation or make a large purchase. Everything was going great. You were making payments on time and paying off the monthly balance. But maybe times got tight, your hours were cut at work or your partner lost their job. You used that credit card as a safety net. Now, you’re in deeper than you thought, and your credit card management skills went a little off the rails. Not to worry. We’re here to help you learn how to pay off credit card debt with some quick and easy tips.
How to Pay Off Credit Card Debt
It’s important to remember that a credit card payoff plan should be personalized to your own circumstances and financial goals. But with the right tools in your arsenal, paying off credit cards in full isn’t impossible. We’re going to cover a few practical tips to help you start paying off debt.
Add Up Your Debt and Assess Your Financial Situation
The first step in creating a credit card payoff plan is adding up all the debt you owe, whether that’s multiple credit cards or just one, and documenting it all in one place. It’s important not to forget to include the APR or interest rate on the cards. Every month you fail to pay your balance off, the debt will continue to grow. High interest rates are one of the reasons credit card balances can easily get out of control. So, if you do need to use your credit cards for purchases, especially large purchases, make sure to put those charges on cards with the lowest interest rate.
Looking at each card’s interest rate will also help you come up with a plan to attack your debt. It’s smart to pay off credit cards with a higher interest rate first. You can also start by paying off credit cards with the lowest balance first, which might give you the confidence to take on larger sums. No matter what tactic you decide, it’s critical to continue making minimum monthly payments to avoid late fees on top of accruing interest.
Create a Budget
If you haven’t done this already, it’s time to create a budget and stick to it. Decide how much money to allocate towards critical expenses like housing, utilities, transportation and food. Set a small sum of money aside for incidentals and allocate the rest for a solid credit card payoff plan.
You’ll also want to find ways to free up money here and there. How many streaming services do you pay for every month? How often do you cook versus eating out? These are all questions to ask when paying off credit cards in full. Cutting back until you get debt under control is necessary. Make sure you allocate those extra funds to paying off your debt rather than new clothes or tech accessories.
The Perfect Storm of Credit Card Payoff Plans
When it comes to solid strategies for tackling credit card debt, we suggest one of these three methods: the avalanche method, the snowball method and blizzard method. They’re all equally successful at paying down debt, but it’s about picking the right credit card payoff plan for your lifestyle and financial goals.
- The Avalanche Method: This credit card payoff plan involves paying off credit card balances with the highest interest rates first. That means, if you have multiple credit cards, continue to make the minimum payments on your other cards. For the card with the highest interest rate, pay the minimum amount, plus any extra you can afford.
- The Snowball Method: This debt repayment plan suggests paying off credit cards with the lowest balance first. This approach will help you build confidence through making small, positive changes in order to take on bigger balances.
- The Blizzard Method: This strategy is a combination of the two previous approaches. You’ll start by paying off the credit card with the smallest balance to build confidence. Next, you’ll take on the card with the largest interest rate.
It’s always a good idea to reach out to your credit card companies to see what resources they offer to help pay down debt. No matter what strategy you choose, you’re making a concerted effort to pay off your credit card debt. Following any of these credit card payoff plans will help build your credit score and get your finances back into a healthy place.
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Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.