Consumer debt plagues a lot of people. It’s easy to use your credit card to spend money, but if you’re spending more than you earn you can dig a pretty deep hole very quickly. There may not be a magic bullet to paying off credit card loans or your consumer debt, but there are ways you may be able to apply smart financial planning to achieving your goals quicker. Here is everything you need to know about repaying your credit card loans.
Paying off Highest Interest Rates First
Sometimes referred to as the “avalanche method,” this credit card loan repayment strategy has you start with the highest interest rate. Begin by paying all the minimum payments on your accounts. Whatever extra money you have, put it toward the card with the highest interest rates.
A similar method is the “snowball” which starts by paying off the lowest debt amount rather than the highest interest rate. This allows you to see your loan shrink by significant increments as you pay off complete amounts.
Consider Balance Transfers
You can make headway on your personal credit card loan payments by playing around with balance transfers. For example, if you have a card with a high interest rate, consider moving all or some of that balance to your credit card with the lowest rate.
If there is a balance left on your high interest rate card, you can focus on paying that off first while continuing to make the minimum payment on your lower interest rate card. You can also open a new account, but pay attention to the terms for 0% interest balance transfers.
Take Out a Personal Loan
If you have a lot of individual cards making up your consumer debt, a personal loan which can be used to consolidate payments could be useful. There are a variety of ways to get a loan to help you make these payments, including searching for online title loans.
If you do use a loan to pay credit cards, make sure you leave any paid-off cards open to preserve your credit score. Also, you’ll have to shift your focus to paying off the personal loan to try to mitigate any additional loan payments or penalties.
Find a Debt Settlement
You may find yourself with a large amount of debt but feel overwhelmed by the multiple sources. If so, a debt settlement might be a good step. A creditor or collections agency can work with you to accept a partial payment on outstanding consumer debt.
This is especially useful if you’ve experienced a hardship such as a major life chance, illness, or job loss. Also make sure you conduct enough research to avoid scammers. And make note of any high fees that might be attached to the process.
Paying off your credit card loan debt doesn’t have to be overwhelming. It may feel that way, but with a little careful planning you can adjust your finances and pay off the debt faster. You can follow this with more organized financial planning and budgeting to avoid more debt in the future.