Best Ways to Pay Off Credit Card Debt
Paying off credit card debt can be an exhaustive process if you’re just making the minimum payments each month. But there are several tips for paying off credit card debt you can use to make the process more manageable. Read on to find some of the fastest ways to pay off credit card debt.
Cut back on expenses
This may seem like the most obvious way to pay off credit card debt but it’s also one of the most effective. By reevaluating your spending habits and funneling more money towards paying off credit cards you can start paying off credit card debt faster. Analyze your spending habits from the last month and decide which expenditures you can do without. Then funnel those extra dollars straight to your monthly bill for one of the quickest ways to pay off credit card debt
Transfer your balance
It may seem like an odd concept but one way to pay off credit card debt is by paying off one credit card with another card. Known as a balance transfer, your first step is to find a new credit card that carries a lower interest rate than your current card. Shop around to find the best deal and you can save a great deal of money in interest over the course of your credit card payoff. Also be sure to take into account balance transfer fees, which are generally calculated as a percentage of the total debt being transferred.
Take out a home equity line of credit (HELOC)
If you need help paying off credit card debt you can always consider a home equity line of credit, or HELOC. Like a balance transfer, the goal is to get a better interest rate so that you can lower your monthly payments and pay off a credit card more quickly by putting those savings towards the principal balance. While this may not be one of the best ways to pay off credit card debt if you rent, it is a strong option for homeowners wondering how to pay off credit cards.
Personal loans
How do you pay off a credit card using a personal loan? You have a few options. First, check with traditional banks and credit unions to determine if you qualify for a lower interest rate loan to pay off credit card debt. Many financial institutions require fairly good credit to take out a personal loan, so if you can’t find one offering a better rate than your credit card, try a peer to peer lending site. You can take out a personal loan funded by individual investors who benefit from the interest you pay. This method of paying off your credit card carries an average rate of 15%, which is lower than many people’s credit card rates. Using loans to pay off credit card debt is a great way to save money on interest and pay down that principal more quickly.
Debt consolidation
For people with low cash flow wondering how to pay off credit cards, debt consolidation may be a good option. This requires working through a counseling agency to create a new payment plan combining all of your debts. If you have high interest rates and don’t know which credit card to pay off first, debt consolidation can help simplify your credit card pay off. This is not a good option for people looking for how to pay off credit cards quickly because debt consolidation can take years. However, debt consolidation payments are generally consistent so you won’t be surprised by payment increases.
Debt settlement
Paying off credit card debt in full isn’t always a viable option. If you have stopped making payments your creditor may decide to write off the credit card debt. This doesn’t absolve you from making the payments; instead, your account will be transferred to a debt collection agency. They may offer you a debt settlement plan, which allows you to pay off credit cards at a lower amount. Even if your credit card debts have been written off you need a solid plan to pay off that credit card.
Whenever you use third party agencies to find the best ways for paying off a credit card, do your research to make sure you choose a reputable company.