Having more than $15,000 in credit card debt is a lot, but it’s about average for U.S. households, according to NerdWallet analysis. Carrying this, or any amount of credit card debt, from month to month can be overwhelming and disastrous to your credit score. Paying off this debt is possible, but it takes focused determination and smart budgeting.
Before you start sending the credit card company a stack of money each month, sit down with all of your account information and total your credit card debt. That goes for all credit cards, including store cards and gas cards. Take a look at your balances, interest rates and minimum payments due.
- Make a plan. If you have an end date in mind (the date by which you’d like to have all zero balances), use the NerdWallet payoff calculator to determine just how much you’ll have to pay each month. This tool is also great for illustrating just how fruitless it can be to pay only your minimum payment every month.
- Consider a balance transfer. Credit card companies often offer balance transfer credit cards with 0% APR for an introductory period of up to 18 months. If you’re paying 19% interest on a high balance, cutting this interest could save you hundreds of dollars. NerdWallet’s most recent roundup of balance transfer cards will help you find the one that works best for you.
- Stop spending. The more you add to your credit card balance, the more difficult it will be to reduce your credit card debt. So, stop spending. If you don’t have cash, don’t make the purchase.
- Look for places to save. Find places to cut expenses and direct those savings to your debt. Maybe you can go without cable television for a few months, or perhaps you can reduce your restaurant budget to only one meal out per month. Cutting back on the things you enjoy can have double the benefits: reducing your spending and giving you incentive to pay off your debt.
- Look for opportunities to earn. Maybe you can take on a part-time job for a few months or earn some cash on the side doing freelance projects. If you’ve made your household finances work without a part-time gig, all of the money earned here can go toward paying off your credit card debt.
- Be flexible. You didn’t rack up your credit card debt overnight, and it may take much longer to pay it off. If you make a plan to put $400 on your balance every month, but have a tough month, don’t feel bad about cutting that payment to $350 (as long as you always make at least the minimum payment). Just pick it back up the following month (or earlier) with renewed dedication to getting debt-free.
Man carrying a heavy box image via Shutterstock.
The post Reduce Credit Card Debt with These 6 Tips appeared first on NerdWallet Credit Card Blog.
Source Article :http://bit.ly/1AfvfHZ
0 comments:
Post a Comment