Where Can One Get Help for Carrying Large Amounts of Debt/credit and Not Paying It Back on Time?
Credit card debt is something many Americans battle with. In fact, many American households carry multiple thousands of dollars in credit card debt.
That's no small number for a family that has to also worry about paying for a mortgage, college, and retirement savings.
If you're feeling the pressure of credit card debt, there are ways to expedite your payoff process.
While there's no way to eliminate credit card debt overnight, there are things you can do now to shave your payoff time by months or even years - and potentially save you thousands of dollars in interest in the process.
1. Lower your interest rate
Ever wonder why it can seem so much harder to pay off a credit card than other types of debt?
If so, the answer is simple: high interest rates.
If you're on a tight budget and can't pay more than the minimum, lowering your interest rate enables more of your money to go to the principal balance.
If your budget is more flexible and you can pay more than the minimum, then also lowering your interest rate will help you boost your payoff plan.
So, how can you lower your interest rate?
Ask for a lower rate
The first thing you can do is call your credit card company and ask them for a lower interest rate. The best way to achieve this is to highlight what you've been doing well.
For example, if you've never missed a payment, that's a factor that helps you. If you've had the credit card for a long time, that's also a factor that helps you.
It may seem sometimes like a bank or credit card company is the enemy, but that doesn't have to be the case. Show them how you've been a great customer for them and they'll do what they can to make you happy.
When you call your bank or lender, remember to be friendly and persistent. Don't tell them what they "have to" do for you. Instead, kindly highlight your proven loyalty and positive customer behavior.
Don't tell them a sob story and don't try to appeal to their emotional side. Just be reasonable, nice, and concise.
And if you talk to someone and get an immediate "no," ask to speak to a supervisor.
Moving it up the chain may just get you the interest rate decrease you're looking for. Without a lower rate, see how little of your payment goes to the principal balance.
2. Get a balance transfer credit card
If lowering your interest rate doesn't work - or if your interest rate isn't lowered by much - consider a balance transfer credit card.
A balance transfer credit card is a card you obtain with the purpose of paying off debt. These cards typically come with an introductory interest rate of 0% for at least six months (usually longer).
After the introductory period is up, the interest rate will increase to a much higher amount.
Because of the increase, there are two things to consider when you obtain a balance transfer credit card:
- The first thing you can do is create a plan to pay the card off by the time the introductory period ends. In other words, divide the whole balance by a number of months you have to pay it off. Make that number your "minimum" payment. If that's too high for your budget, get as close to it as you can.
- The second thing you can do is obtain a new balance transfer card when your introductory period ends. To prepare for this, do everything you can in the meantime to protect your credit score (make all of your payments on time, never miss a payment). Then, continue to get as close as you can to the first suggestion. While balance transfer credit cards are useful, they can lead to an endless cycle if you continue to only pay their minimum payment and continue to obtain new balance transfer cards.
Since the interest rate on a balance transfer is so low, these cards can be a fantastic way to boost your debt payoff efforts. But they don't come for free.
Most balance transfer credit cards come with a balance transfer fee. It typically costs 3% of the transferred balance.
With a card that waives this fee, you'll save much more money on your journey to eliminate debt.
Here is a list of balance transfer credit cards, including one that doesn't charge a balance transfer fee:
If you really need a cushion to have some fun, split it 90/10.
For example, use 90% of your tax refund for credit card debt and the remaining 10% for savings or something fun.
While this slows down progress a bit, it's a way to boost your motivation if you're feeling worn down by the payoff process.
Most of all, remember that momentum is a powerful thing.
When you receive an extra sum of money, seeing it take a chunk out of your debt balance can feel amazing. That alone is often enough of a boost to keep you going.
The same applies if your income increases, either from a promotion, new job, or work on the side. Rather than increasing your monthly spend, you could live on the same budget and apply the increased income to debt alone.
After all, you've already grown used to living on your previous income, why not stay that way until you're debt free and get there faster?
Once you pay off the debt, it will feel like you had a raise anyway as all that money you were spending on debt can go wherever you want.
Debt doesnot have to be forever
Credit card debt can feel like forever when you're deep in it, but it doesn't have to be that way.
If you can do things like lower your interest rate, create a better payoff plan, and apply extra money towards payoff, you're likely to see faster progress than you ever imagined.
The main thing to do here is to never avoid your credit card debt.
Never pay minimum only without a plan. And do your very best not to accrue any additional debt as you work to pay off your current debt.
If these steps aren't working for you, it might be time to revisit your budget and figure out what's not adding up.
And remember, you don't have to be able to pay hundreds of dollars extra each month to pay the debt off faster.
You just have to make a plan and stick to it. You will get through this - as long as you don't give up.
Refinance your credit cards at a lower APR:
Where Can One Get Help for Carrying Large Amounts of Debt/credit and Not Paying It Back on Time?
Source: https://www.mybanktracker.com/credit-cards/advice/how-to-pay-off-credit-card-258153