Americans carry a ton of credit card debt. In fact, the average credit card balance per person in the US is $6,375. And when you add up all the credit card debt in the US, it comes to over $1 trillion!
That’s a lot of money, and I must admit that I’ve been contributing to that number. I make a decent living, but I definitely like to splurge a little here and there. Well, maybe a little more than just here and there. Truthfully, my spending was a little out of control.
I had no problem whipping out the plastic in an effort to cover big spending sprees whenever I felt the need to add something new to my life. But that got me nowhere. No, scratch that – it did get me somewhere: in a heap of credit card debt.
Based on the above-mentioned numbers, it looks like I wasn’t alone. I knew I needed to obliterate all that credit card debt that I carelessly racked up over the years. But when that number is sky-high, whittling it down while paying exorbitant interest rates was a tall order.
Heavy Credit Card Debt is Tough to Pay Down
Credit cards are notorious for having super-high interest rates, some as high as 22% and beyond. And when you’ve got a huge outstanding balance still left to pay, that debt load just becomes even more overwhelming. The higher that credit card balance gets, the more you’ll be paying towards interest.
It’s not uncommon for consumers to barely scrape enough money together every month just to pay the minimum balance. In fact, that was my situation. I was in those shoes, and it didn’t feel very good. In fact, I felt like I was stuck in a hole that seemed nearly impossible to climb out of. But I knew I needed to make some changes if I was ever going to climb out of that hole of mounting credit card debt.
It definitely took some self-discipline and dedication, but I was also lucky enough to have some handy tactics and tools available to me to help shave down my credit card debt. If you’re wondering how to pay off your credit card debt, here are some tips to help you pay it down before this year is up.
Pay Off the Smallest Credit Card Debt First
If you’re like many Americans, you might have more than one credit card that’s wreaking havoc on your finances. If that’s the case, consider paying off one credit card at a time, starting with the card with the smallest outstanding balance. If you are just learning how to pay off your credit card debt, this might be a good place to start.
Once you pay that debt load off, move on to the next card with the smallest balance using the money you were using to pay off the first credit card until all your credit card debt is fully repaid.
This strategy is helpful because it helps to keep you motivated. When you see your effort paying off, you’re more likely to keep forging ahead. Since smaller debts can be paid off faster, that will give you the spark needed to hit the next card.
Pay Off the Card With the Highest Interest Rate
With this tactic, you’ll be paying off one credit card at a time similar to the above strategy. But with this tactic, you’ll be targeting the card with the highest interest rate. A higher interest rate means your contributions to the interest portion of the balance will be higher.
The longer it takes you to pay off the credit card with the highest interest, the more money it will cost over the long run because you’ll be paying more in interest fees. By paying off high-interest credit card debt first, you can save money and even pay off all your debt faster. Knowing how to pay off your credit card debt quickly can help you achieve financial freedom sooner rather than later.
Pay More Than the Minimum
As I mentioned earlier, many Americans tend to pay the minimum payment every month. But this barely makes a dent in the overall balance, if any at all. And the longer that balance sits there unpaid, the more interest will accumulate and need to be paid. That’s like throwing money out the window.
Instead, if you pay more than the minimum amount, you’ll end up not only paying less in interest overall, but you’ll be able to pay down your debt faster too.
Pay a little bit extra every month; going above your minimum payment is probably the best way to pay off your credit card debt. Each dollar you contribute over the minimum amount will go towards your outstanding balance and shrink it faster.
Revamp Your Budget
Obviously, a great way to pay down your credit card debt is to spend less. After all, the less you spend, the less debt you’ll rack up. At the same time, you’ll be freeing up more money that can be used to pay down your outstanding debt.
But this isn’t always easy if you don’t have a workable budget in place. Even if you’ve got one, you may want to revisit it and make any necessary changes.
Start by organizing your monthly spending into categories, such as groceries, child care, car payments, mortgage payments, toiletries, and leisure spending. Take a look at these areas and determine where you think you may be able to scale back. Some payments will be fixed and unable to be changed, such as your mortgage or car payments. But leisurely expenses and even groceries might be able to be cut back to a certain degree to help you free up some money to pay down your debt.
Consolidate Your Credit Card Debt With a Payoff Loan
If the interest rate on your credit card is making it almost impossible to pay off your outstanding credit card debt, then perhaps you may want to think about taking out a new loan – at a much lower rate – to pay off credit card debt. This is perhaps the best way to pay off your credit card debt. And if you’ve got more than one credit card with outstanding balances, you can consolidate them all into one, easy-to-manage loan.
There are a few ways to go about consolidating your debt to pay off your credit card balances, and one handy tool available to you is the Payoff Loan. Payoff is a company that is filled with experts in finance, psychology, and technology who create workable programs to help the average consumer improve their overall financial wellness.
They’ve come up with what’s known as the “Payoff Loan” which was created to help consumers pay off their credit card debt much faster compared to other methods. It works by consolidating all credit card debts – and other high-interest outstanding balances – into a single monthly payment. You can borrow anywhere between $5,000 to $35,000, depending on your exact needs and how high your credit card balances are.
The application process is rather simple and only takes a few short minutes to complete. All you’ll need to do is choose the terms of the loan that will work best for you, verify your information, and electronically sign the paperwork for the loan. If you’re approved, you’ll receive the funds needed to pay off your credit card balances and be left with only one payment to have to deal with every month, at a much lower rate. In turn, you’ll be in a much better position to pay down all of your credit card debt faster.
I’ve been where you are, and I know how overwhelming and frustrating it can be to continue to see the same balance on your credit card bills every month. But there are highly effective strategies that you can employ to pay down that debt, as well as certain tools and programs that you can tap into to finally become debt-free. Sure, it will take some work and maybe even a little sacrifice, but the end result will be well worth the effort.