Credit card debt can be everything from a minor annoyance to something that keeps you up at night. Dealing with this debt ensures your financial situation is sound and your credit score in good shape. If you have been paying the minimums and maybe throwing a little extra in each month, now is a great time to dive in and create a plan for paying off your debt.
Look at Personal Loans
Personal loans are a great option for paying off debt. They allow you to pay off what you owe and then repay the loan at a lower interest rate. This can save you hundreds or thousands of dollars over the life of the loan. Having only one debt repayment each month can also help with the mental aspect of getting your financial life in order. With only one outstanding balance, it is easy to track your repayment and watch the amount you owe get smaller each month.
Consider Transferring Your Balances
Transferring your balances to a credit card that offers a lower interest rate is another method of paying off what you owe. This can be a good deal if you find an offer for zero interest during the first 12 or 18 months. You will need to do the math before making your move. If you don’t repay the loan before the introductory period expires, you may be on the hook for the interest accumulated during this period. Of course, you may not qualify for a low or zero interest balance transfer offer. These deals are usually reserved for borrowers determined to be a worthy credit risk, and you may not meet the lender’s criteria.
Focus on One Card at a Time
If you choose to pay off what you owe the old-fashioned way, focusing on one card at a time allows you to easily track your progress and maintain your momentum. You can choose either the one with the lowest balance or the one with the highest interest rate. Financially, paying off the balance with the highest rate first makes the most sense, but the satisfaction of paying off a balance completely may make choosing the one you owe the least on the better choice. Regardless of which you choose, make the minimum payments on your other cards and throw all of your extra money towards the one you are targeting for payoff. Once you successfully pay it off, move on to the next. As you watch your balances go down, you will probably find that your motivation increases.
No matter how you choose to pay off your debt, the key to success is to stop using your cards. As long as you continue to spend, you will not make any real progress in your journey. Put the cards away and dedicate to cutting costs or taking on a side hustle to balance your income and expenses. Don’t cancel your credit cards. This can tank your credit score, particularly if you have outstanding balances. Instead, take them out of your wallet and erase the saved payment information from your browsers. This makes it easier to resist impulse purchases.