Did you know that the average American has around $38,000 of debt?
If you’re paying off credit cards or still have student debt looming over you, you’re not alone! This can provide some comfort that debt is normal and you’re not failing at life, but it doesn’t make paying it off any easier.
For that, you need real, actionable strategies. Being organized can be the difference between paying your debt off for decades or clearing it in a few years.
If you need help clearing credit card debt, start with this simple guide.
Clearing Credit Card Debt Off Multiple Cards
If you’ve got multiple credit cards to pay off, you might be confused about how to pay them. You want to make a dent, but with so many how can you?
There are two great methods for tackling this; the snowball method and the avalanche method. If you choose the snowball payment, make sure you can make the minimum payments on all your cards each month. Then, with the extra money, focus on paying off your smallest card balance until it’s cleared, and then move onto the new smallest balance.
The avalanche method involves doing the same, but with interest-rates instead. So the first card you focus on paying off is the one with the highest rate, paying each card off until you’re left with the debt with the lowest interest rate.
This is the best advice for clearing credit card debt, but the option you pick is down to you. The avalanche method is more logical as it’ll save you money over time. But the snowball method is more rewarding and may give you more motivation by starting with the smaller debts.
Create a Budget
If you’re looking to pay off outstanding credit card debt, a budget is essential! By tracking your money and being tighter with your purse strings, finding the money to pay off your debt will become much easier.
There are plenty of apps available to help you take control of your finances. These are excellent if you’re a budgeting newbie as they can help you find the motivation to start watching your money.
You can also create your own budget. Simply write down your money coming in and how much you want to spend on different activities. For example, if you have a dinner out coming up, add $40 to your dining out expenses, and make a note of all of your bills.
By allocating money for your month, you can make sure there’s enough to pay your debt whilst still living your life.
Pay Your Cards First
Your debts are a priority, so when you get paid, pay them first! Make sure you’ve budgeted so you know how much you can set aside for your debt and don’t delay the transfer.
If you have the money in your bank for some time, it’ll become much easier to spend it. It’ll also feel like more of a loss when you transfer it to your credit card debt. But, if you send it over as soon as you get paid, there’ll be much less to miss!
Consider a Balance Transfer Card
If you have a high-interest credit card, consider getting a balance transfer card. These often have a 0% interest rate offers, lasting for around 6-18 months, which will help you save money whilst you pay off your debt. They may have a transfer fee of around 3%, but if you have a high-interest rate currently this should be more than worth it.
The issuer of your card will sort out moving the balance from your current account to your new account, making it a simple process. However, you may have to have a good credit score to be able to get a card. If you don’t, you can look at other methods of paying off high-interest cards.
Consolidate Your Credit Card Debt
If you have multiple cards, learning how to consolidate credit card debt will be very useful. The basic idea is you take out one single loan to pay off all of your cards. Then, you work on paying back the loan.
The benefit of this is that you don’t have to pay a lot of different providers every month, and you could even find a better interest rate. It makes the stress of paying your debt much easier and more manageable. However, it can take longer to pay off the total debt as the period of repayment is usually lengthened to reduce the monthly payments.
Be careful when consolidating cards. Make sure it’s the right move for you by looking into all the details before you rush into it.
Hire an Accountant or Credit Counselor
It can be hard dealing with debt on your own. If you’re struggling, consider hiring an accountant or credit counselor.
An accountant can help you get on top of your finances. They’ll look at your income and expenses, finding areas you can cut back to pay your debt off. Their knowledge and support might help you feel more in control and confident when tackling your debt.
A credit counselor can help you with things such as balance transfer cards and personal loans, as well as helping you increase your credit score. Find an agency under the National Foundation for Credit Counseling to make sure you get a team you can trust.
How to Erase Credit Card Debt
A debt-free life may feel like a dream now, but you can make it happen. Clearing credit card debt becomes a lot easier when you know all the tricks! Once you get started and the balance starts dropping, you’ll realize you can do it, it just takes a little bit of know-how.
If you enjoyed this article, be sure to check out more on our website. We have even more great tips to help you live a frugal lifestyle and get your finances back on track!