Cost of Increasing Credit Card Debt
The most obvious cost of carrying a credit card balance is interest. The interest added to your outstanding balances each month compounds the cost and duration of paying off your debt. However, with the right strategy, you can reduce the number of years it takes to pay off your debt and save hundreds – and sometimes even thousands – of dollars in the process.
Credit Card Debt Reduction Plan
With a strong plan in place, you can tackle credit card debt of any size. You need to follow these steps:
1. Discover how much you owe: start by reviewing your total accounts.
2. Understand your spending: adjusting your spending is crucial to paying off credit card debt.
3. Choose a repayment strategy: pay off debt using the “debt snowball” or “debt avalanche” methods.
4. Commit to the plan: the final step requires sticking to your repayment plan and adjusting it as needed.
Balance Transfer Cards and Personal Loans
You don’t need a lot to manage and eliminate debt besides the desire to do so and simple schedules and tools like those we’ve shared. However, consolidating high-interest debts into lower-interest loans can help you get out of debt as well.
Balance transfer credit cards with lower interest rates can make it easier to pay off your debt. When shopping, look for a balance transfer card with a long promotional period and low balance transfer fees. Two great options are the Citi Simplicity Card and SunTrust Prime Rewards Card.
Personal loans: consolidating balances with a low-interest personal loan is an alternative to balance transfer cards. For one, people tend to stop charging new purchases on it. For another, you’ll have a fixed monthly payment, making budgeting easier and more definitive.
Tools and Resources
These calculators, spreadsheets, and other resources can provide the guidance needed throughout your debt reduction plan.
Source: https://www.thebalancemoney.com/money-kit-eliminating-credit-card-debt-5087884
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