Paying Off Credit Card Debt

Balancing Credit Card

While credit cards can be helpful in certain situations, they can also land you in crushing debt. The interest rate on unpaid balances each month can be up to 30%. Month over month, that initial charge can balloon into an unmanageable amount and negatively impact your credit score.

There are some steps to take to get out of credit card debt. First, examine your spending habits to find out how you got in debt to start with. Compare how much money you spend to how much you earn. If the former is higher than the latter, you either need to cut back on expenses or bring in more income. With this knowledge, you can make a budget to follow (click HERE for tips on creating a budget).

Now that you’re aware of how much you have to spend, make sure to pay more than the minimum required amount for each card. This will incrementally reduce the amount of money you have to pay interest on. To avoid paying extra for late fees, consider automating your monthly payments, especially if you have a guaranteed, steady income stream.

There are two main tactics to tackling the debts themselves, the avalanche method and the snowball method. With the avalanche method, you pay off the credit card with the highest interest rate first while paying the minimum on other cards. This helps you take out the most expensive debt first. The snowball method entails paying off the smallest debt first, and then building on that win to pay off more expensive ones. Getting out of credit card debt isn’t easy, but it can be done!

RESOURCES

How to Get Out of Credit Card Debt: A 4-Step Guide – NerdWallet
How to get out of credit card debt – CNET