Foreword
If you’re struggling with credit card debt, you’re not alone. According to a recent TransUnion report, the average American carries over $5000 of outstanding debt on their credit cards. When you fall behind on credit charges, it’s easy to get caught in a seemingly endless cycle of high-interest payments. Although it may seem impossible to escape, you can work toward a debt-free future by implementing the proper strategies. In this guide, we will help you craft a personalized plan to address your debt.
Analyze your debt
The first step you should take is charting the entirety of your credit card debt. This should include all the accounts where payments are due, as well as their corresponding interest rates. After mapping out your credit card debt, you can start to form a budget. Determine how much money you can afford to knock off your balance monthly. With this information, you can create a detailed payment schedule to allocate your funds.
Focus on high-interest debts
Now that you have constructed your budget, you must prioritize which debts to address first. A good rule of thumb is to pay off your high-interest debts before moving on to your other accounts. The higher your interest rate, the quicker your debt will pile on. Therefore, you’ll spend less money in the long run if you focus on eliminating high-interest items. Need extra cash? Check out this site that pays up to $25 per survey.
Contact your creditors
Believe it or not, your credit issuers might be willing to negotiate your debt. If you have a solid record of on-time payments, it will increase your chances of receiving special accommodations. You might receive a slightly reduced interest rate or reduced fees. Additionally, many of the major financial institutions offer hardship programs that can help you reduce debt if you’ve fallen on hard times. If you are behind on multiple payments, consider offering a lump sum that is less than your total amount owed. Creditors will sometimes settle for a percentage of your debt if they fear you may declare bankruptcy.
Look into debt consolidation
Credit card debt can easily become overwhelming when you have multiple accounts to track. Consider consolidating your debts into one account with a balance transfer credit card or personal loan. Though it may seem counterintuitive, interest rates are usually lower on a personal loan when compared to a credit card. By the same token, you could avoid interest altogether by transferring your debts to a 0% balance transfer card and paying it off promptly.
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