If you’ve accumulated some credit card debt and are looking to pay it off once and for all, you’re not alone: according to recent reports from the Federal Reserve, household credit card balances are on the rise. The good news is, with a little planning and focus, you can be well-positioned to tackle that debt.
Read on or watch the short video above for tips to help you pay off your debt and keep more of your hard-earned money in your pocket.
The first step to managing your credit card debt is to get the details on paper. Write down line by line each of your debts – including interest rates – as well as your income and other expenses. Once you’ve documented the numbers, you have the foundation for creating a budget which allows you to design a realistic plan to pay it all off.
The next step is to create a payoff plan. This should outline how much you can realistically pay toward your credit card debt each month, and how long it’ll take to achieve your payment goals.
Let’s say you’ve opened credit cards at all your favorite stores and you’re carrying balances on all of them. Part of your plan could be to pay off the card with the highest interest rate first. This can be a big money-saver over time, since you’ll be knocking out the debts with the higher interest rates as fast as you can.
But some people choose to prioritize paying off the card with the smallest balance first. Getting the number of cards with an outstanding balance out of the way can give people just the psychological boost they need to keep going.
You can also look into credit card debt consolidation, which rolls all your credit card bills into one lower interest monthly payment. The amount you owe will stay the same, but you’ll pay less in the long run since you’ll be paying less in interest.
Whatever strategy you choose, always try to make more than the minimum payment each month.
So you’ve listed out all your debts and come up with a payment plan that works for your budget. Now it’s time to see where you can cut expenses and save some extra cash to lower your balance.
Consider setting up automatic transfers to your savings account every payday. That way, you can put aside money for your card payments before you have a chance to spend it. Before long, you could pay off a chunk of debt without much effort.
Even little changes like shopping the sale section or opting for generic products instead of brand names can really add up.
Above all, make every effort not to add to your debt while you’re paying it down.
Paying off credit card debt takes time and effort, but it’s a fundamental step toward financial security and freedom.
Get more tips to help you manage your debt.
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