How to Pay Off Credit Card Debt Quicker
Credit card debt is a problem many American families face. According to one recent study, the average American adult with a credit card has more than $5,000 in credit card debt.1
High interest rates make it hard to pay off credit card debt without losing a lot of your hard-earned money along the way. The only way to save your money is to pay off what you owe quicker.
Use these tips to help you pay off your credit card debt.
Pay More than Your Minimum Payment
One way to pay off credit card debt quicker is to pay more than you’re required every month. Paying more than your monthly minimum payment can help save you money down the road. We’ve all been there – in hard financial times, it’s just easier to pay off as little as possible. But only paying the minimum means you will pay more in interest and ultimately owe more money, not less!
Cut Unnecessary Expenses
At first, it may seem hard or even impossible to pay more than your monthly minimum credit card payment because of other expenses you have. But take a closer look – you may be able to cut your spending in other places to help you pay off your credit card debt.
- A lot of people are cutting the cord these days. Try reducing your cable package or even cancelling your subscription for a cheaper option.
- Make a grocery list … and stick to it, use coupons and choose generic over brand names. Try making fewer trips to the store each month and buy non-perishable foods in bulk when you can. Smarter grocery shopping may also help you order less take-out and limit your restaurant visits.
- Cut shopping for a few months.
These ideas could help free up some money for you to pay off your credit card debt. Even an extra $20 or $30 can really help.
Set a Budget
Now that you’ve cut some of your monthly expenses, create a budget. It may seem like a big task, but the steps are actually easy. Simply divide your money coming in by your monthly expenses. To do so, figure out what you will need to pay for your bills, grocery trips, any savings accounts and for fun. Even if there’s not a lot of money to go around, creating a plan gives you more control over your spending and helps you see opportunities to pay your credit card debt quicker. Another benefit? By setting and sticking to a monthly budget, you’ll use your credit card less.
A balance transfer is when you move your credit card balance from your current card and company to a new card and company. Many credit card companies offer 0% interest (also called APR) on balance transfers for a set period of time. Moving your balance to an interest-free card means you have more time to pay what you owe without added fees. Just make sure you cancel or cut up your old card so you don’t begin using it again and end up with more debt. After your transfer your balance, stick to the tips above: Pay more than the minimum, cut expenses where you can and set a budget.
If you have more than one credit card and you have other debts, such as medical bills, a debt consolidation loan could be an option for you. Debt consolidation loans are loans to pay off several debts with one loan. By consolidating your debt, you will shrink the amount you are paying monthly. You will also reduce the amount of interest that you would have paid on these debts separately.
Being in debt is hard. But these tips can move you closer to financial freedom by helping you pay off your credit card debt quicker. Even though each situation is different, the principle is clear: Make sure you set a plan to pay off credit card debt that works for you.