6 Tricks to Paying Off Credit Card Debt
Credit card debt. Not a fun topic to discuss. But, if you stay on top of things, credit card debt doesn’t have to be a sore spot.
Credit card debt is the outstanding balance that you carry over on your credit card from month to month. Unless you pay off your credit card – or cards – each month, lenders charge you interest on any balance. This can start a cycle of debt that is hard to escape!
But don’t worry. There are some tricks to paying off credit card debt that can keep you on the straight and narrow. Keep reading to learn more about paying off credit card debt.
1. Get Organized
As with any project, the first trick to paying off credit card debt is to get organized!
Gather all your credit cards and get to work. Make note of the balances, interest rates, due dates, and minimum payments for each card. Examine your findings for spending habits or trends. These may help you hone in on a strategy for clearing that debt.
For example, you may notice that you use one card more than the other or have been spending more than usual on certain items or expenses. This information is key to strategizing how to pay off that debt and – taking us to tip #2 – setting a budget.
2. Stick to a Budget
Creating a budget is the most effective trick to paying off credit card debt. Keeping your spending in line will stop you from overspending!
If, after reviewing all of your debt in step one, you realize you’ve been spending beyond your means, it’s time to rethink your budgeting strategy. Take a close look at how much you bring in versus how much is going out each month. Your goal is a budget that allows you to stay on top while also saving each month.
A strong and realistic budget will also allow you to pay more to reduce your credit card debt. You can put any extra money toward whittling down your credit card debt.
3. Set a Goal
After you review your outstanding balances and assess the situation, it’s time to set a goal.
What type of goal? Well, that depends on your situation. If you have a lot of debt on a lot of different cards, your goal will be different than if you only have one card with a balance.
Your target could be to pay a certain amount each month to bring the balance down or pay off one card first. It takes careful consideration of the type of credit card debt you carry to plan out your most effective strategy.
At ACU, our goal is to help you meet your goals! If you need assistance establishing your plan of attack, our financial experts are here to get you on the right track.
4. Don’t Miss a Payment
The most critical tip to managing credit card debt is to always make the minimum payment. Of course, paying more if possible is helpful!
But, no matter your situation, it’s important to pay the minimum balance each month. Making the minimum payment on your credit cards every billing cycle ensures that you do not get stuck with late fees or dings to your credit report.
Remember – even if you are carrying debt and figuring out the best way to pay it off – making minimum credit card payments will do a great deal toward keeping you financially healthy.
5. Eliminate Debts One by One
If you carry a balance on more than one credit card, it can help to focus on paying down one card at a time. Some time-tested methods can assist in narrowing your focus.
Pay High-Interest Debt First
Credit cards come with interest rates, or the price you pay for borrowing money. Interest rates are listed as the annual percentage rate (APR) and vary by credit card. You can avoid paying interest if you don’t carry a balance on your card.
If you have a balance on multiple cards, look at the different APRs and pay them off from greatest to least. You’ll still want to make the minimum payments on any other cards, but target the one with the highest interest rate first.
This strategy – sometimes referred to as the debt avalanche strategy – eliminates high-cost debt first. Once you’ve paid off that card, continue down the line until all your debt is gone.
While it’s usually best to pay high-interest debt first, you may feel as if you need some momentum to get you going. In this case, the snowball method may be for you.
With the snowball method, you pay off the credit card that carries the least amount of debt first. Once paid off, you roll that amount into the next smallest loan. Keep that going – like a snowball going down a hill – until your debt is eliminated.
6. Consider Debt Consolidation
If you are carrying a balance on multiple credit cards, consolidating that debt may be a good tip to pay off credit card debt.
When you consolidate your debt, you roll your multiple debts into a single payment – one that usually carries a lower interest rate. Some ACU options can help!
At ACU, we offer different credit cards to meet your needs – even debt consolidation!
Transfer high-interest balances from other financial institutions and save! Consolidate your different card balances into one low payment on your ACU account at a great rate. Our financial professionals can help you select the right card for you.
By paying off your high-interest credit card debt with a personal loan, you bring all your payments under one umbrella with a lower interest rate.
ACU allows members to borrow between $500 and $25,000. We have competitive interest rates and terms to help you stay ahead.
Let ACU Help You Pay Off Credit Card Debt
There are many tips for paying off credit card debt and ACU can help you with them all! Our financial professionals are here to assist members with anything they need to achieve financial success.
Once your debt is under control, take a look at your financial picture to see if any adjustments need to be made. Believe it or not, if your credit score was hit by debt, a credit card – used responsibly while sticking to a budget – could help you build that score back up.
Click below to learn more!How to Build Credit With a Credit Card