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Studies show that a single credit card holder can accrue up to $15000 in credit card debt every year. While that might seem like such a huge amount, it accumulates over time, so it is easy for you to miss the growth. If you ever want to get rid of your credit card debt, you need to make a plan. Here are some pointers on how to go about it.
- Find a Payment Strategy
You will realize with credit card debt that you need to be intentional about paying it back. If you do not make a plan and stick to it, the interest will increase, resulting in more debt. Here are a few payment strategies that might work for you when you start paying off the loan.
- Automate- One of the easiest ways to ensure you regularly pay off your debts is to automate the payment. First, contact your bank and see if they can be sending regular payments to the credit card company. That way, you always make a payment each month.
- Pay above the minimum- Every credit card company will have a minimum amount you can be paid to clear your credit card debt. If you want to clear the debt off faster, you can be paying above this rate. While it might seem like a lot at first, you will be able to clear all your credit card debts in a shorter time than anticipated.
- Debt snowball- If you have more than one loan you need to pay off, you can get overwhelmed. In such a scenario, you can start paying a certain amount for all your loans. Once you clear a smaller loan, you can then transfer the money you were paying for the smaller loans into the bigger loans. With such a method, you get to clear all the loans you have, including the credit card, at almost the same time.
- Talk to Your Creditors
If you get to a point where you feel like you have such a huge loan that you are unable to clear in time, talk to your debtors. Some of them will offer you options like debit relief. For example, if you live in Toronto or surrounding areas, you will want to reach out to creditors who can provide you with debt relief in Toronto. With such an offer, you can either get more time to pay off the loan or get some of the interest slashed off because of the current payment. However, do not suffer in silence just because you do not have an option for paying off the loan. Speaking up will ensure you can clear the loan without a major incident from the debt collectors.
- Review Your Spending
One of the things that led you to have such a huge credit card loan is how you use your card. Take your time and go through your monthly spending. It will give you a bigger picture of what you spend your money on and what you can do to reduce your spending. Most of the time, all you need to do is cut off certain luxuries and get cheaper options for the items you buy. Once you cut off your spending, you will realize that the amount charged to your card will significantly drop. You will then be able to pay off those loans in a shorter time.
- Get a Balance Transfer Card
If you have a good credit score, you can get a new card and use it to pay for the previous card’s credit. The process might seem very long, but it will ensure that you have more time to pay off the credit card debt, and the interest that was accumulated will not be as high as it was on the other card. The only downside is, you will pay back more interest in the current card than you would have if you had cleared the previous debt.
Credit card debt is not something that should keep you awake late at night. But, with a few intentional steps, you are on your way to clearing this debt and leading a debt-free life. First, take your time and figure out which plan will help you pay the debt faster. You can also talk to a financial advisor who will help you go through your options and pick out the best one for you.
