How to Pay Off Credit Card Debt Fast ?
Digging yourself out of debt is always advisable, and the place to start is often any outstanding debt with higher interest rates, like credit cards.
Let’s suppose you owed $10,000 on your credit card with a fairly typical interest rate of about 18% annually. Depending on your credit rating, chances are you could find a personal loan that could have a lower interest rate than your credit cards, and possibly save you a small fortune.
In a recent poll it was discovered that 72% of U.S. adults admit to experiencing unexpected financial setbacks. Without having room for unexpected expenses due to being in debt (or not having any savings) you can possibly face financial difficulties when unexpected expenses find their way to your door.
RELATED: How to Cut Credit Card Debt in Half and Pay Off
Credit Card Debt – Strategies for Repayment
Taking care of credit card debt is a smart way to get your finances under control. Credit cards provide an enormous convenience, but when the amount owed isn’t managed and gets away from you it can be a problem.
Using a debt consolidation loan to take back control of your personal finances is often the answer, especially when you have credit card debt on several cards with varying interest rates.
Using a credit card debt consolidation loan is often your best plan as it allows you to pay off credit card debt fast, or faster than if you just made payments. The quicker you pay down that debt the less interest you have to deal with, and in the long run it should cost you less by using a loan to pay off your credit card debt.
There are a few ways you can approach credit card debt that some credit counselors advise to use to tackle the issue and get your finances under control.
Debt avalanche – this is when you focus on paying off the debt of the credit card with the highest interest rate first. Once that’s taken care of, start paying off the next card with the highest interest rates and continue this way.
Debt snowball – this is where you would focus on paying off your smallest credit card debts first so that you can feel motivated and a sense of accomplishment as you climb out of debt.
Paying Off Credit Card Debt
When looking to consolidate credit card debt with a personal loan you should be aware of a few things to effectively get back on track.
APR – The annualized percentage rate (APR) is like the cost of borrowing. The APR is almost always higher than the interest rate, which can include other costs associated with borrowing the money, such as fees, and charged on the principal loan amount.
Terms – Repayment of a personal loan comes with terms, from interest rates and fees to how long you might borrow for. The repayment terms often range from from 24 to 84 months, and can determine just how much it will cost to borrow. The longer the term often means more will be paid in interest, even if it lowers your monthly payments.
Another option some choose is the use of a balance transfer credit card, which might seem like a good option on the surface but there are a few things you should know. They can (help or hurt) your credit score, you might get a higher interest rate, and the promotional interest rate might run out before you are able to pay down the debt. While every person may have a different situation based on their own credit history, we would often recommend looking at personal loans before balance transfers to consolidate credit card debt.
Being Smart While Paying Credit Card Debt
While trying to pay down credit card debt, it’s advised to limit your use of your credit cards. For some this might seem obvious
You can remove temptation of using them by removing them from your wallet until you have paid off any outstanding balances. If you feel that you might need to have one in your wallet, consider prioritizing any outstanding debt owed if you have multiple cards and avoid using the ones with the most owed.
If your credit score is above 640, you probably have a good chance of getting a personal loan to help with debt consolidation. If your credit score is below 640, you might want to look into ways to improve your credit rating or debt relief solutions. Those with a good credit rating will benefit from better terms and interest rates when taking a personal loan, and those with an excellent credit rating will enjoy even more of the same.
Learn more about credit cards, how they work, and how to choose the right one for you.