Credit card debt is one of the biggest problems faced by Americans. It seems like charging up credit cards is just the American way. Easy money has always appealed to people and this has enabled the credit card companies to thrive.
The problem is that you can charge those cards up in days but it often takes years to pay them off. If you are struggling with credit card debt, there is a light at the end of the tunnel. You can pay off your debt, you just need to have a plan.
Here are some proven ways to pay off your credit cards quickly.
Take Our A Personal Loan
A personal loan can be used to consolidate all of that credit card debt into one lower interest loan. It can help you in several ways. It will allow you to lower your total interest paid, it will simplify your monthly bills and it could raise your credit score. That is right, it could even raise your credit score. This is because taking a personal loan can often increase your credit diversity. Paying off the cards will lower your credit utilization as well. Both good things for a credit score.
If you have good credit, taking out a personal loan is a simple process. Look to a company like Discover Loans which can make you an offer online. With average credit card interest hovering over 17 percent in this country, it is not hard to get an offer with much lower interest. With good credit, you should expect an offer around 5 percent. That will dramatically lower the interest you are paying so that you can pay your debt off fast.
If you have bad credit, which is common for those with high credit card debt, you may have to do a bit more work. You still may be able to get a personal loan but the terms might not be as favorable. Look to a company like Loan By Numbers for a personal loan offer. Just be careful to make sure that the interest rate on the loan is not higher than the average interest you are paying on your credit cards. If it comes in even a few percentage points lower, it might be worth taking.
A personal loan to consolidate debt is a great tool, but if you ca n not qualify, you still have other options.
Use The Debt Snowball Method
The debt snowball method is a motivational method that you can use to get your debt paid down. A snowball starts small and builds up over time and that is what you do with this method.
First, organize your credit card accounts from the smallest balance to the largest balance. Then, pay just the minimum on all of your credit cards except the smallest one. On this card, you pay as much as you can until it is completely paid off. The idea here is that by attacking the smallest card first, you will get a card “paid in full” first. That will motivate you to push on.
After paying off the first card, move on to the next lowest balance. Repeat this process again and again until your credit card debt is gone.
If motivation is key for you, the debt snowball method is a good choice. If you are a bit more logical however, you might like this next method better.
Use The Debt Avalanche Method
The debt avalanche method uses logic to pay off your debt. You will actually pay your debt off faster with this method, but it may be less motivating, so you need some discipline.
Take all of your credit cards and organize them in order of highest to lowest interest rate. Then, pay the minimum on all of your credit cards except for the one with the highest interest. Pay as much as you can on that card until it is paid off. The idea here is that you pay off the debt that is costing you the most interest. This allows you to maximize your money.
Once you pay off the first card, move on to the next highest credit card interest rate. Rinse and repeat until all of your credit card debt is gone.
This method will pay down your debt faster, but is often less motivating. This is because your highest interest card may be one with a high balance that will take longer to pay off. The longer it takes to pay off a card, the less satisfying it is and the harder it is to stay focused.
Handling Your Credit Cards Once Paid
If you get that debt paid off, pat yourself on the back and then think about how you will never get into trouble again. Take all of that extra money that you save without your monthly credit card bills and divert it into a nice emergency savings. That will give you the emergency money you need and prevent you from having to charge up a credit card again.
As for the credit cards themselves, keep them. The urge might be to cancel the accounts but this is likely a huge mistake. Cancelling those credit cards would lower available credit and could hurt your credit diversity. Both of these things could cause your credit score to tank.
Instead of closing your accounts, put the cards up for safe keeping. Use your credit card once every 6 months on a small transaction and then immediately pay them off. This will keep the credit card companies from closing your account if they deem it inactive.
The only cards that you should consider closing would be those with an annual fee. Before you do that though, you should call your creditor and ask if they can remove the annual fee.