Are you challenged with excessive credit card debt? Don’t despair! While credit card debt can feel challenging, it can be overcome with work and planning. You can take action today and achieve mastery over your finances!
Try these easy ways to reduce and eliminate your credit card debt:
- Always pay more than the minimum. You have to kick in more than the required payment to avoid paying for what seems like forever.
- Look at how much you pay monthly that’s going towards the interest. Only the amount beyond the interest payment reduces your debt.
- Consider your savings. While you’ll want to keep some cash on hand for emergencies, using part of your savings to pay on your credit card can be brilliant.
- If the interest rate on your credit card is 17%, and the interest on your savings account is 1%, you’ll be way ahead in the long run if you put that money towards your credit card.
- Borrow against your 401k. If you’re drowning in debt, you can always borrow money from your 401k.
- All the interest you pay goes back into your 401k and can earn you even more.
- Currently, these loans have to be paid back within five years. Check with a financial advisor to get all the details.
- A 401k loan can eliminate your credit card debt, and the payments will be taken out of your paycheck, so you won’t be tempted to spend the money in other ways.
- Negotiate with the credit card companies. Credit card companies, like everyone else, want to be paid.
- If you genuinely can’t pay under your current terms, they may be willing to make some adjustments to your situation. Interest rates can be lowered, and incurred penalties can be reduced or even removed.
- Although these companies are more likely to negotiate if you already have a history of paying late or not paying, it can’t hurt to ask! You might be surprised by what they’re willing to do for you if you’re proactive.
- Find a lower-interest card. There are a lot of credit cards out there. Moving your high-interest rate balance to a lower interest rate can save you a lot of money.
- Also, you can call your credit card company and tell them you’re looking to move your balance to a lower-rate card; they might reduce your interest and save you trouble.
- If you do decide to move your balance, be sure to read the fine print. Sometimes those lower rates are just temporary.
- Home equity can help. You can use a home equity loan to pay your credit cards if you’re a homeowner with equity in your house. The interest you’re paying is even tax-deductible in most cases.
- Ensure the payments will be manageable for your situation. Home equity loans can get expensive quickly! Plus, your home is your collateral with a home equity loan, so if you don’t make your payments, you could lose your home to foreclosure.
Whatever strategy you use, avoid the common mistake of repeatedly running up the balance on your credit cards. Then you’ll potentially have a loan and a credit card balance to deal with. Cut up those cards you don’t need (yes, literally!) and move forward with your life on a cash-only basis.
If you’ve a lot of debt, avoid waiting for things to get even more challenging. Pick the best idea for your situation and charge full speed ahead. Imagine how much better you’ll feel when that credit card statement arrives in the mail and the balance owed reads $0.00!
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