People who are drowning in credit card debt often don’t see a way out. In this post we will discuss a few important tips on how you can swim out of credit card debt and never have to look back.
Designate a separate credit card
If you find yourself in credit card debt then I would highly recommend you stop using credit cards altogether. However, even if you still choose to use credit cards, the least you should do is stop using the credit card with the high balance. There are two reason for this:
- Psychologically– In order to turn the page, you need to stop using the card that has the debt. Start using a different card for your new purchases. Like this, you can make sure to pay your new purchases in full every month instead of just adding it to the pile of debt. Ultimately, this will help you climb out of debt.
- No grace period – The card that you carry a balance on does not have a grace period. Therefore, you pay interest on all the new purchases right from the day of the purchase (even before the new charges are due). That adds lots of more interest that you would have to pay on the new charges (you can learn a lot more about this here). That’s why, by using a different card, you’re saving all this extra interest.
Transfer to a 0% APR card or negotiate your interest rate
Another great thing you can do in order to pay off your existing debt easier and faster is to transfer the debt to an intro 0% APR card. With an intro 0% APR card you can get up to 21 months interest free, making it much easier for you to pay up your debt within the 21 month period as its interest free. Intro 0% APR cards have already helped many people get out of credit card debt. You can find a full list of available offers here.
We discuss exactly how a 0% APR balance transfer works here.
If you can’t get approved for an intro 0% APR card then at least try to call your bank to negotiate your interest rate. Very often, banks have hardship programs that you can join where you can work out a good payment plan and a deal to reduce your interest rate. Just make sure that the hardship program you join is not a program that will report late payments on your credit report. Double check with the bank a thousand times that they will report all your payments as current to the credit bureaus even after you join the program.
Pay more than your minimum payment
And last but not least, create a plan on how you’re going to pay up your debt. Designate a certain amount you’re going to be paying each month towards your credit card bill. And make sure to stick to the plan so that you are able to knock down your debt and never look back
You can find a good calculator to figure out how much to pay per month and how long it will take you to pay up your credit card bill here.
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