Depending on how you see it, credit cards can be a major convenience or a never-ending source of financial trouble. With the frankly extortionate rates charged by banks and credit card companies, one would do well to take care not to fall into credit card debt.
As reported by CNBC, it is estimated that Americans owe a total of $830 billion in credit card debt as of 2019. This number is not expected to go down anytime soon and continues to be a worrying trend entering 2020.
Here’s a quick test to determine if you’re overly reliant on your credit cards.
1. You pay for necessities such as food or gas with your credit card.
2. You regularly use up 40% or more of your card’s spending limit.
3. You get stressed out thinking about your bills.
4. You won’t be able to make ends meet without your credit card.
If you’ve answered yes to at least 2 or more of the above points, chances are that you’re in way above your head. Fret not, however, as you’re not alone. From a recent study, it was determined that nearly 70 percent of Americans will not be able to pay off their existing credit card debt within the year.
While it may be a cold source of comfort, there’s still hope yet. Having spoken to our team of experts and counselors, we take a look at how you can quickly and easily pay off your credit card debt.
1. Start Making Payments
Yes, you heard it right. The simplest yet most difficult way of getting out of credit card debt is by paying it off. Banks and credit card providers make most of their revenue by charging you exorbitant interest rates on any outstanding balance.
Thus, it’s always best to stay on top of your debt by continually making payments. Forget paying the minimum amount, pay as much as you can possibly afford every month. This strategy works best if all of your debt has been consolidated on a single card or if you’ve taken out a debt consolidation loan.
Paying the minimum amount only lengthens the time taken to pay off your debts while at the same time incurring additional interest.
If you have trouble budgeting your cash flow for the month, consider making payments twice a month. The first payment is made immediately after you’ve received your salary and the second towards the end of the month.
The first few months will be difficult at first, but as you adjust your lifestyle accordingly and start to see your debt falling, you’ll be motivated to continue onwards.
2. Consolidate All Of Your Debt
Facing down a mountain of debt can be overwhelming at first and at times, you won’t even know where to start. Don’t give up, instead start by taking stock of everything and anything that you may owe.
This gives you a “big picture” view of what needs to be paid off and when. From here, you can either opt to perform a balance transfer or take out a debt consolidation loan.
With a balance transfer, you’ll be able to transfer all outstanding debt to a new credit card that charges zero percent interest for a certain period of time. This gives you breathing room to pay off any outstanding debt.
On the other hand, a debt consolidation loan is a low-interest loan that is used to pay off your outstanding debts. These loans usually charge lower interest rates which in turn allow you to incur fewer interest expenses.
3. Perform A Self-Audit Of Your Expenses
A side-effect of today’s modern lifestyle means that most of us end up accumulating a variety of unneeded expenses. From Netflix and Hulu to nights out dining with friends, a lack of financial prudence is a surefire way for one to end up with crippling debt.
Instead of spending cash unnecessarily, seriously consider making a lifestyle change by performing a self-audit of your monthly expenses. Search for a more affordable internet package, cook more often and take public transport where possible.
The extra cash you’ll save up can then be used to pay off your debts. Experience has shown that over time, you’ll realize that you could actually have done without all the frivolous luxuries.
Now that you’ve finally paid off all your credit card debt, you should focus on staying out of it. Paying off your credit card debt may seem daunting but it’s in fact much easier than betting on the SuperBowl winners.
The hard part often comes from the many sacrifices and lifestyle changes that need to be made along the way.