Living under a cloud of credit card debt can affect every aspect of your life. Whether you’re trying to pay off one card or multiple cards, you need a plan in place to help you clear your debt so that you can start planning for your future. Explore the following tips to help you as you plan to pay off credit card debt.
When you’re making a plan to pay off your credit card debt, first consider how many cards you’re trying to pay off. Obviously, the more cards you’re dealing with, the harder clearing your debt will be. Fortunately, you can pay off debts for multiple credit cards as long as you take it one step at a time.
You could also choose to prioritize paying off your credit cards by their outstanding balances. Start with the card with the lowest balance. After clearing that card, the money you were using to pay off the debt can go toward the next card. Eventually, all of your credit cards should be paid off.
In the previous section, we discussed how paying the minimum amount due on your credit card each month is crucial, especially if you’re attempting to pay off multiple credit cards. If you’re only dealing with one credit card, however, then the best way to get out from under your debt is paying a little more than the minimum amount each month.
Paying money over your minimum amount due helps to clear your debt in two important ways:
On your credit card statement, you’ll find a chart that indicates how paying over your minimum amount due impacts your interest rate. Try this strategy for a few months, and you’ll notice an impact on both your interest and how much you still owe on your card.
As your creditors grow, paying off your debt will be more difficult. If you’re tired of trying to manage payments to multiple credit card companies, then you should consider using a debt consolidation plan to help you deal with your debt.
Consolidating your credit card debt can be advantageous if you’re trying to pay off several high-interest cards. With consolidation, your different outstanding balances will be combined into one, and this new balance will often have a significantly lower interest rate.
If you’re interested in debt consolidation, you can choose from two primary options.
Before you choose debt consolidation, you should be certain that you’ll be able to control your spending habits. Consolidating your debt but failing to adjust your lifestyle may cause you to incur additional debt.
Although you can choose from among several solutions to pay off your credit card debt, examining and reprioritizing your budget is the most effective. Excessive credit card debt almost always results from poor spending habits, which means correcting these habits is one of the most important steps that you can take if you want to clear the debt from your life.
If you’re ready to pay off your credit card debt, you first need to sit down and categorize your month-to-month spending. Look at your bills and break down your spending into several categories:
Your credit card statement can help you with this task, since many companies break down your spending for you.
Once you have a basic idea of where your money goes each month, you can further categorize your spending into essential and nonessential costs. Groceries, housing, and transportation, for example, are essential categories, while entertainment would be considered nonessential.
Look at your bills and identify areas where you can cut back. Trim your entertainment budget and look at your grocery bills to see if you could be spending your money more wisely. The money that you cut out of your monthly budget can go toward your credit card debt so that you can pay off your balances in a shorter time span.
If you need help coming up with a plan to pay off credit card debt, Solvable is your trusted resource. On our website, you’ll find a library of articles that can help you learn about the different methods for getting rid of debt, and our debt relief company reviews can help you pick the right company to help you pay off your credit cards.