Get Out Of Credit Card Debt
Revolving debt in the US soared to $19.8 billion at the end of 2021, which is the largest increase in history. Credit cards are unequivocally one of the most expensive types of debt due to their high interest rate, late fees, and other penalties. Eliminating credit card debt may be the best personal finance move to make.
5 Ways To Eliminate Credit Card Debt
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Follow A Payment Strategy
It’s easier to pay off credit card debt when you’re following a concrete strategy. These strategies have been tried and tested by numerous people”
The Snowball Method
In the snowball method, you focus on paying off the smallest balance first. Once you have paid off the smallest balance, you move on to the next smallest one until you reach the largest balance.
The Advance Method
The avalanche method reverses the snowball method. With this method, you pay off the credit card with the highest interest rate first, then move to the one with the lowest interest rate. The principle here is to minimize the cost of your debt. Since those with higher interest rates end up costing more in the long run, you prioritize paying them.
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Pay More Than The Minimum Payment
If you have been paying your credit cards for years but you can’t seem to slash off a good amount, it’s because you are probable paying only the minimum monthly payment. The minimum payment will only cover the interest on your outstanding balance, and does not really reduce your debt. So, even if you pay every month, you will still end up with more debt.
For you to actually pay off your credit card debt, you will need to pay more than the minimum amount required. If you can pay double that, you will eliminate your debt faster.
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Make Multiple Credit Card Payments
Many consumers do not realize that credit card interest is actually calculated based on Average Daily Balance (ADB) method. This method adds each day’s balance on your credit card and divide the total by the number of days in the billing cycle. If your credit card issuer uses this method, it is wiser to pay smaller amounts on your balance throughout the month, thus lowering your daily balances and reduce the interest accrued on your debt. However, your total payments must be equal or greater than the minimum payment required.
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Consider Debt Consolidation
If you are carrying multiple credit cards, the monthly payments may be overwhelming. You will be able to breathe better if you only have to pay one bill every month. The answer to your problem is to debt consolidation. This is typically advised to individuals with good credit scores, but it’s not inaccessible to those with lower ratings.
Through our Access Loans program, you may be eligible for a personal loan regardless of your credit rating. With fixed rates and flexible payments, you’ll be able to eliminate a portion of your debt.
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Minimize Credit Card Use
Naturally, you will need to minimize, if not completely stop, using your credit cards in order to pay them off. Try to use your cards only for emergencies and larger purchases if absolutely necessary.
Ask us about our Access Loans product.
2022 ACCESS LOANS™ product is offered by Safra National Bank of New York (“SNBNY”) Member FDIC, Equal Housing Lender.
