Four specific strategies to help pay off credit card debt
Credit card debt can put a hamper on the personal finances of anyone who carries it for a significant amount of time as it accrues interest each month.
To avoid a situation where debt piles up, people should consider one of these four strategies to help attack their balances:
No. 1 – A balance transfer
Consumers who have a good enough credit score to qualify for a card with balance transfer features might want to consider this option. Not only does this allow them to have a single monthly payment, but balance transfers can also keep credit card debt interest free for an extended period of time. This can be extremely beneficial as the major downfall of credit card debt is that interest piles up over time with APRs upwards of 20 percent
No. 2 – Pay the card with the highest APR
Those who would prefer not to complete a balance transfer may want to attack the card with the highest APR first. This will be the card that is costing them the most money by allowing a balance to sit for months on end, so eliminating it can be very beneficial. Once this card has been paid off completely, consumers should go down to their second most expensive card and so on. Of course, they will want to make minimum payments on their other accounts during this time as well.
No. 3 – Pay off the lowest balance
Sometimes, paying down debt can be a mental challenge. To help make it easier, people might want to go after their card with the lowest balance first. Having a card paid off completely can give them a sense of progress and encourage further debt payments. Additionally, it can lead to fewer payments so people have more money to put toward their credit cards that are costing them the most.
No. 4 – Tap into savings
Having savings is essential, especially to be prepared for unexpected expenses. For example, people who find themselves with a surprise car repair could be in trouble without savings. However, too much credit card debt can cost people a significant amount of money in interest. Those who find themselves in this type of situation might want to consider sacrificing some of their savings to pay down their debt.