It’s so easy to get into credit card debt, but very hard to pay it all off. For one, it takes some serious change of perspective to admit you’re getting into ballooning debt. Cutting off your bad spending habits is the first step, and with it must come the commitment to pay it off for every extra cash you get. Here are the five best strategies to pay off your credit card.
The “Avalanche Method”
This is for those that have debt with more than one credit card. It calls for you to arrange your repayment priority from the card with the highest to the lowest interest. Pay at least the minimum balance for each of the cards, but any extra cash you have got goes to consistently paying off the highest interest cards first. When that card is all paid up, you can move on to the next highest debt until everything is paid off.
This method ensures you appreciate the little successes of paying off the biggest ones first, making it easier to pay off the next ones. Knowing which one to prioritize is also good way to practice delayed gratification, in the sense that you’re committed on chipping off the wall of debt every time you have some extra cash.
This method is best for those who have maxed out their credit cards and are now being bombarded with calls from the banks and collections agencies. When you’ve reached this stage, banks will e-mail you of the amount you have to pay. You can then either go to the bank or call the numbers provided on the e-mail and ask them for debt restructuring. You can then come into an agreement as to how much and when you will be able to settle your debt.
Say you’ve found a credit card with a much lower interest rate than the one you have now. If you’ve incurred some debt over your current one, it’s best to apply for the one with lower interest and opt for balance transfer. We learn from our mistakes, so this time, make sure you’ve completely understood the terms and conditions with this new account. Check the annual percentage rate (APR), rewards, and the cut-off dates.
If you don’t want to deal with a credit card ever again, you can apply for a personal loan and pay for your credit card debt all at once. It’s the fastest way to be cleared of the credit card debt, and most personal loans have much lower interest rates than credit cards. This applies to individuals who have not incurred their debt for over a year, as they may not be included in the black list yet, or rather, this debt has not affected their credit record with banks just yet. So, you still have plenty of time to redeem yourself if you apply for a personal loan and settle it all at once.
Freeze Your Credit Card
If your impulsive spending habits are the reason behind your ballooning credit card debt, request to freeze your credit card until you’ve paid it all off. Regardless if the amount is way off or just below your credit limit, you can control your habits by putting off your card use.
It’s easy to disregard a couple of impulsive buys here and there and going overdue on your credit card bills payment once, but these are already the early signs of dwindling money management. You’ll do better to catch yourself before you’re trapped into this cycle of debt.