Credit cards are very important and useful tools, especially in some financial situations. They can even provide certain perks like discounts and rewards etc. However, if people depend too much on them, they can get captured in a never ending cycle of debt paying.
However, here are some tips for paying off credit card debt.
If you are avoiding your bills, then stop because this has no positive outcomes. The first step would be to calculate actually how much debt you have amassed. Also, include debt that you do not normally include like student and medical debt. This will provide you with a fuller amount.
Secondly, detail all your bills and be as detailed as possible by adding as much of your expense like groceries, money spent eating out and other expenses for entertainment like tickets for movies etc.
These small purchases can add up very quickly and so it would be better for you to stop spending your money on those items. While spending the money you use eating out on your debt may seem difficult for a time but it will help. Instead of eating out, try to eat leftovers for your dinner last night only for a short time. Also if you are not using your gym membership cancel it and just walk around your neighbourhood for free.
After getting an idea of your expenses and now that you have stopped amassing debt try to get a good option for your repayment. This depends on your circumstances so you can consult a financial expert for the best option. For example, if you are a homeowner you can refinance your mortgage for making your monthly payment smaller to get more cash for putting toward your debt. Bridget McGee with the nickname of Maryland Mortgage Mama is a mortgage loan originator say that that this can save you money in the long run since mortgage interest is deductible towards tax while a credit card cannot.
The second option would be a loan from a credit union and once approved the bank will pay off your debt to the credit card company, and you have to then make payments to your bank. Bank interest is lower compared to a credit card company, and since the interest rates are settled at the time of taking out the loan, this is a better way to pay off debts. However, be careful not to amass debt again.
Alternatively, if you wish to pay off your debt yourself try to pay off the card with the greatest debt and interest first. This is known as the debt snowball by a financial expert named Dave Ramsey. Therefore try to pay the minimum amount on the other cards and put the most money on the card that has given you the most debt. In this way work through each card and eliminate your debt.
While non-profit companies exist for credit consolation, they should be a final resort since it is damaging to your credit score when you use them. These companies try to get you lower rates from the creditor, and you give them monthly payments which they give to the creditors. However, check their ratings online before using them to see their reputation.
McGee states that if someone has too many cards with too much debt it can make them more likely to miss a payment and if a payment is missed you can have your credit score lowered. This leads to several problems such as leading to higher interest rates, cash penalties etc. If you are unable to pay then try to negotiate a later date for payment with your company as well.
While paying off all this debt can seem difficult at first ignoring the problem and hoping it will remove itself will make it work so work on your finances and pay them as soon as possible and your good credit rating will be your reward.