It has become very common among the credit cardholders to not clear the dues every month and this gets converted into credit card debt. It has been noticed that people think that credit cards are a means to spare money and they can spend it recklessly. However, as a result of this attitude, they find them entangled in the web of debt.
Credit cards are a quick way to pay for the purchases and also to deal with financial problems. All banks provide credit cards suiting the different needs of the customers.
Though the cards function as a great solution, you can end up with a credit card debt. What happens when you do not use the card wisely? You may go on purchasing and at the end of the month, you realize you have a huge bill that has accumulated. In such a situation, the credit card becomes your liability.
There are some ways in which you can pay off the credit card debt quickly. Having an idea of some of the ways will only help you to get out of the debt circle faster.
Five ways to pay off credit card debt
Changing the spending patterns
When you have a credit card in your purse or wallet, there are chances that you will be tempted to go for dinner or lunch at fancy restaurants. Some people prefer to buy a new dress for different occasions. But this must not be the trend. You may have a good time eating out with friends or colleagues or you may get compliments wearing the new dress. But in the long run, you will only end up with a credit card debt if you do not pay all these bills on time.
So, one of the basic things that you can do to avoid falling in the credit card debt trap is to sacrifice all these high-end expenditures. Make a budget about how much you will spend in a month. Instead of going out often for dinner or lunches at high-end restaurants, organize a get together at your home. This will cost less than eating out and you will still be able to spend quality time with your friends.
Make timely payments
It is always a good thing to be punctual about credit card payments. Set a monthly payment target so that you do not falter. You must always keep this in mind and more so when you have a credit card debt piled up. You can also pay more than the minimum amount. This will only lessen the burden on your shoulders. You must never let the interest to get accumulated. That will only cause more harm than good for your finances.
If you do not pay the amount on time, you will have to pay a penalty amount. This harms the credit card score. If there are a lot of negative credit score on the card, you will not be able to apply for any kind of loans. And even if you apply for the loans, seeing the credit score, you will not be given the loan.
The credit card company can also increase the interest rate that they charge if you do not pay the amount on time. The more the interest, the higher will be the bill amount. Instead, mark the date of payment on a calendar. If you are going to be late, it is better to inform the company and ask to get you an extension.
Hiding the credit cards
While it may sound childish to many people, but this is a good idea that you can put to use to pay off the credit card debt. Begin paying everything in cash. When you have to pay for something which is priced at 600$, it will be difficult to get so much cash in our pocket instantly.
However, if you have a credit card, you will not think twice and order the product. When you have to pay using cash, you become more aware of the price of the products. You see the prices, check your wallet, and then decide whether you need it or not. This is a good way of saving money and with the money saved you can quickly pay off the accumulated debt.
Snowball method to pay the debt
The snowball method means that you pay the debts which have the smallest amount to the largest amount of debts. For this, one will have to first make a list of the debts accumulated. Then make the minimum payments on the credit cards. Once you have made the payment for the smallest debt, and then take this money that you have been saving for this debt and channel it to another small debt payment. In this way, one needs to continue to finally pay off all the smaller debts.
People love this method of paying debts as the small successes motivate them and they finally feel that they are doing something concrete and useful. This motivation keeps them going. With the help of this method, one can also increase their credit scores. The sooner you reduce the credit debt on the cards, the better your credit scores become.
In this method, you first aim for the smallest payment regardless of the interest rates. The more you conquer the smaller debts, the more money you will have in your hands for you to pay the larger debts. The fact that you have been able to pay off the debts will keep you immensely motivated.
Using balance transfers to pay debts
When you are in credit card debt, you can transfer the balance to another card. For example, you have an account with a high rate of interest. In such a situation, you can transfer the balance to a card that has a low rate of interest. This will allow you to spend less money on the interests that you will pay. This means that you are using one card to pay off the credit card debt of the other.
There are many balance transfer credit cards available that will offer 0 per cent APR as an introductory offering. This is valid for 6 to 18 months. This 0 per cent APR is important as you will be able to pay the credit card balance and you will not incur any extra charges on the interest too.
There may be a balance transfer fee. It is better to consult with the credit card company before actually opting for the particular credit card.
Credit card debt is dangerous. People are lured due to the low introductory APR offerings from the credit card companies. But the interest rates of the credit cards are very high. If you pay the minimum balance every month to pay the debt, chances are you will need a huge period to clear the debts. Coupled with this is the high-interest rate which will keep on adding as time passes on. Hence it is better to spend wisely and not be swayed by the great offers.
To sum up, credit cards are a huge help but only if you use it well. If you are already in huge debt, keep these tips in mind which will help you to eliminate the credit card debt.