Looking for ways to pay off credit card debt quickly? There is no easy solution if you’re up to your nose in debts. Fortunately, there are always ways out if you really want a way out. Just check your commitment because you need to have a serious commitment in managing the debt.
Let’s have a look at your monthly payments. The trends of your monthly payments may send you a negative or a positive signal. If they are towards paying the minimum balance only, it’s a sign that you must stop doing what you’ve done and do something to turn around your financial situation.
Here are things that you want to do: check your level of debts, know how you use credit cards and make a plan for repaying your debts. Below you can learn about the effective methods on how to pay off credit card debt.
Can You Make the Minimum Payments?
You can start by making a simple spreadsheet about all your credit cards. This includes the balance, the interest rate and the minimum payment based on the latest statement. Try to rearrange the list so the highest interest credit card is at the top position and then sum up all the monthly minimum payments.
Once you get the total of monthly minimum payments check your ability to pay them off. If you can’t pay the minimums your next step is debt negotiation. You want to negotiate debt settlement with each of your credit card companies so they want to lower the interest rates and remove late charges.
What If Creditors Don’t Want to Reduce Interest Rates?
If you haven’t contacted your creditors start doing so. Tell them your situation and show your genuine intention to pay off your bills on time. Ask them to reduce your interest charges and other fees to make the payment more affordable for you.
If they don’t want to lower the rate shop around to find a zero APR or low-interest credit card. There are plenty credit card issuers out there offering very low introductory interest rate cards that let you transfer your balance. However, make sure to check your credit score first because these offers usually only valid for people with good to execellent credit rating.
Pay Off Credit Card Debt Starting from the Highest Interest Card
If it’s possible to make more than the total monthly minimum payments try to focus on paying the credit card with the highest interest rate. This means you pay off the required minimum for all other credit cards and maximize your payment for the highest interest card.
Once the first credit card debt is paid off, start paying the second highest interest with the amount you’re used to pay the first one. Apply the same discipline as what you will have done with the first credit card, while you continue to pay off the minimum balance of other credit cards.
Once you start paying off the high interest card, there are risks that you will use the card again instead of continuing to pay down. For that reason, learn about debt management so you can continue increasing your monthly payments to speed up your credit card debt repayments.
You can compound the repayment results by adding the minimum balance to the initial amount for the next credit card payments. The formula works like the illustration below.
The second round, you pay the initial amount plus the minimum balance of the first card. The third round, your monthly payment is the initial amount plus the minimum balance of the first card plus the minimum payment of the second card. Just add the minimum balance to the amount of the last monthly payment for the next round of payment until all credit cards are paid off.
Debt-snowball is another method that you can apply to pay off credit card debt. If you need small successes to keep motivated in reaching your payoff goal just use this method instead.
Find Other Sources of Funds to Speed Up Your Debt Repayments
Want to pay off credit card debt even faster? Find other sources of extra cash to increase your monthly payments. You can use various sources of funds to help you pay off credit card debt as long as the cost of the money — interest charges and other fees — is less than the cost of your credit.
Try to save some cash by reviewing your monthly spending and reducing expenses for less important things and activities. You can also cash out your saving account or borrow against your insurance policy. And if you have family and friends who love and trust you, try to borrow money from them.
How Long Will It Take to Pay Off Credit Card Debt?
Simply play around the calculator by filling in your balance, interest rate and monthly payment. Make sure you check the radio button before “What will happen if I pay extra”. You can start from what you usually pay each month. If you want to simulate your payment duration just add extra payment in your calculation.
Other Methods to Manage and Pay Off Credit Card Debt
1. Debt consolidation. Debt consolidation is a way to pay off credit card debt. It works through controlling the debt level and making it possible for you to pay more than the minimum requirements. There are many options for you to choose from: a secured consolidation loan, a debt consolidation program, 0% or a low-interest credit card and then transfer your balance to the new card.
2. Debt reduction. These methods start from simply using cash instead of a credit card to getting help from a professional. You might find a similar method used in debt consolidation such as in using a 0 or low APR credit card for transferring your balance. But the main idea of this approach is to pay off credit card debt using a method that offers the lowest total cost.
3. Professional help. There are different debt relief services for credit card debt: credit counseling, debt management, debt settlement and consolidation loan. You can even find programs affiliated with Christians or other religious organizations — just be careful with them because there are fraudulent agencies affiliated with Christians.
Overall, paying off credit card debts need a sound plan and a commitment to stick to the plan. You want to be flexible when facing emergency situations with unexpected expenses. But your rewards are great feeling about your new habits and a restored credit rating.
What to Do After You’ve Paid Off Credit Card Debt
Once you’ve paid off all your credit card debts it’s important to stay out of debt. Although you’ve gained a better money management skill you’re still vulnerable to a new round of credit card debt. For that reason, you want to set up a system that allows you to keep your new spending habits and enjoy the fruit of all your efforts.
A good way to follow-up your success is to continue obeying the rule you have followed when you’re paying off the debt. Here are some of them:
1) Always pay your credit card bills on time and pay them in full.
2) Keep a monthly budget and discipline yourself to stick to it when charging your credit cards.
3) Only use about 30% of your credit limit
Just add (or reduce) the above rules using your personal experience. Use your system to develop good spending habits so you’ll be sure you don’t have to pay off credit card debt again in the future and stay out of debt forever.