How to eliminate credit card debt

How to eliminate credit card debt

August 23, 2016
eliminate credit card debt
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A large portion of Americans suffer from this modern plague called credit card debt. It’s stressful, it’s annoying, and sometimes inevitable. But you can get rid of it. Here are some simple ways that will help you eliminate credit card debt.

1. Try to make more than the minimum monthly payment

A lot of Americans get into credit card debt because they only make the minimum payment each month. This might look like a good thing at first, but it’s not.

If you’re worried about the amount of credit card debt that you’ve accumulated over time, try to make larger payments each month. You can also make more than one payment per month. Card issuers charge interest on a daily basis. So, the sooner you make a payment, the faster your average daily balance decreases. Ultimately, you will pay less.

2. Transfer your balance

Moving the balance from a card with a high interest rate to another card, with a lower one, can save you hundreds of dollars. But there’s a catch. Only do this if you’re committed to making the payments on time and paying off the debt within the introductory low-interest-rate window. This typically lasts between 12 and 18 months. Otherwise, your rate will increase dramatically and you might end up owing even more than before. Avoid making new purchases with the card and be aware that you’ll also be charged a balance-transfer fee. This fee is usually 3 to 4 percent of the total amount transferred.

3. Transfer just one card at a time

If you’re carrying balances on multiple cards, don’t try to get rid of everything at once. It can backfire on you. The smart thing to do here is to take on one challenge at a time.

First, think about what you really want. If you want to pay one credit card off, start with the card with the lowest balance. If you want to boost your credit, pay off the card with the highest utilization rate. And if you want to pay less interest, then start with the card with the highest interest rate.

4. Ask your creditors for lower interest rates

Don’t be afraid to call your credit card company and ask them to reduce your rate. If you have a good credit score and if you always make your payments on time, you just might get it. Also, if you’ve been offered a lower rate by a competitor, use that. Even the lowest reduction can end up saving you hundreds of dollars in time.

The bottom line

Few things are more important that paying off your credit card debt. It’s hard work, but, if you do it, you’ll get rid of one of the biggest stress factors currently out there.

Thomas Hookton

Thomas Hookton is a finance journalist, history buff and science fiction connoisseur. Hit him up via email.

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