Did you know that the average American has $90,460 in debt when you include their mortgages? That’s a big enough number to make you lose sleep at night.
As far as credit card debt goes, the average American credit cardholder has $6,194 on their various cards.
Credit cards often come along with high-interest rates that make it feel impossible to ever pay your debt down. With some planning, though, you can work to get out of credit card debt.
Let’s take a look at some tactics and tips to help you get on top of your credit card debt.
Choose a Credit Card Debt Payment Strategy
There’s no one right way to pay off credit card debt, but there are a number of popular strategies that can help people move past their debt. The most important thing is that you find a strategy that works for you, and having a strategy can help you plan and manage credit card debt.
The goal when working to pay off credit card debt is to pay more than the minimum each month for at least one of your debts. As a part of a budget plan, you can have a certain percentage of your income that is set aside every month to go towards paying off debts. Once you no longer have debt, this money can go to your savings account.
Let’s take a look at some of the most well-known ways to pay off credit card debt.
In this method, you take your debt that has the highest interest rate first and focus on paying it off. With all of your other debts, you simply pay the minimum monthly payment. Once you pay off the highest interest rate debt, you move onto the next highest interest rate debt, and so on until you are no longer carrying debt.
The debt snowball method takes a different approach than the debt avalanche method. You actually focus on the debt you have that is the smallest and work to pay it off entirely while paying the minimum payment for your other debts.
Once you have paid off your smallest debt, you can move to your new smallest debt. The idea with this method is that by approaching the least intimidating debt first, you can gain some momentum and feel some rewarding feedback from having succeeded in paying off one debt. It then becomes less daunting to work your way up to some of the heftier debts you hold.
If you have a number of different debts that you feel you can’t keep track of, you might consider debt consolidation. This is also a reasonable idea if the debt you are carrying has a high-interest rate.
Debt consolidation is basically when you take out another loan or a credit card and transfer all of your debt to one place. This means that you only have to pay one bill every month rather than a number of different bills, which can just help simplify the whole process. You also might be able to lock in a lower interest rate on the debt, which means that you can pay less money overall and pay your debt off sooner.
Balance transfer cards and personal loans are both ways you can consolidate debt. This is a powerful tool but you will want to make sure you use it responsibly. If you aren’t careful, you could end up simply taking on more debt in the long run rather than getting on top of your debt.
Debt Management Plan
For people who are seriously struggling with a lot of debt, a debt management plan can help them get out from under the heap of debt. Through working with a nonprofit credit counseling agency, you can have a repayment plan that cuts your interest rate and lets you steadily climb out of debt over time.
If your credit has been hurt by the process of being in debt, you also might consider using a credit repair service.
Tips For Paying Off and Managing Credit Card Debt
It can be worthwhile to sit down and set some goals for yourself in regard to your debt. Let’s take a look at a few additional tips to help you deal with debt.
- Knowledge is power: Make a budget and track your expenses to understand where your money is going every month
- Lower your bills: You can have more money to put towards paying off your debt if you can cut down on your monthly bills
- Find a way to boost your income: A side hustle can help give you some extra cash to put towards debt repayment
- Consider using the tool of consolidation: Look into your current interest rate and learn about how a lower interest rate could help you pay less and pay your debt faster
If you are struggling with debt and simply can’t get on top of it, consider your options in the form of debt relief.
Is It Time For You to Get Out of Debt and Improve Your Credit?
There are countless dangers of credit card debt that can leave you in a nearly constant state of stress. When you have credit card debt, it can be hard to ever climb out by simply just making the minimum payments. If you aren’t able to even meet your minimum payments or your cards are maxed out, it can have a negative impact on your credit score.
Is it time for you to take charge of your credit score and repair your credit? If so, contact us today!