Here are some helpful tricks you can use to pay off your credit card debt faster.
A recent study conducted by Money on how the coronavirus pandemic is changing the credit card habits of Americans shows that 70% of them do not plan to cancel or close their credit cards and 38% say the credit card is the only way they can buy something during these hard times. 11% of Americans stated that they are more stressed about credit card debt than any other debt, since September 2020.
Credit card debt is something that puts a lot of pressure on the well-being of people, especially if you want to achieve your financial freedom at some point. Even though you may feel stuck in a vicious circle of always relying on your credit card, you can get out of it by changing some of your spending habits and having a strong budget plan after analyzing your needs and your income. And the best part of it is that with a little more determination and a good strategy you can pay your credit card debt faster.
So here are some tips and tricks that can help you do that.
How to Pay Your Credit Card Debt Faster
Understand your needs
Before you decide to start adding more money to your credit card debt, you first need to analyze your spending habits and your needs. For starters, you could ask yourself these questions: How much money do you make monthly and what do you spend it on? Do you use your credit card for essential purchases that you can’t buy otherwise or do you use it for takeout every day?
When you have a clearer picture of how you stand financially you can choose a strategy that can help you achieve your goals. Financial planning is very important, otherwise, we’d remain in debt chaos that will eventually overwhelm us. The road to financial wellness is not an easy one, but it’s for sure worth it and achievable. Plan your budget and be honest with yourself about how important all of your purchases are each month.
Prioritize your spendings
After you cross the line at the end of the financial month, try to take out the spendings that you could do without for a while or to lower them. Do you really need to buy takeout food each day or could you also cook from time to time? Once you check what habits you can pause for a while, you will save money. The money you save you can add to your credit card debt. In time you can pay it and close it faster by making payments in advance.
Postpone some bigger purchases that are not urgent
Maybe you want to buy the new iPhone, but do you really need it now? Could you wait some time and continue to use your current phone? Paying your credit card debt faster requires some compromises, but you need to keep in mind this distress is temporary. After you finish paying your credit card debt you can start buying the things you postponed or return to some habits that you had before (as long as you are moderate with your spendings).
Use the snowball method to pay off credit card debt
If you have more credit cards or you want to tackle other debt too, the snowball method can help you. By using the snowball method you first pay off the smallest balance and then work your way up the debt ladder, until you finish paying all that you owe.
Tips and Tricks to pay off credit card debt
Pay before the due date
This can actually help you continue to use a certain amount of money from your credit card without paying interest if you make your monthly payment on time or before the due date. This can help you during hard financial times as well, when you don’t want to make new debt, but you still need some extra cash to get you through the month. Take out only what you know for sure you can put back next month and don’t forget to pay on time.
Make more than the minimum monthly payment
There is a credit card payment box required by law in each statement sent to you. Review the payment box that includes the minimum monthly payment along with a recommended amount for repayment within 3 years. This box is often overlooked but can help save you thousands of dollars by adding a few extra dollars per month.
For example, paying only the minimum payment on $10,021.28 credit card balance with a 29.99% interest rate would take approximately 25 years to pay off totaling over $25,899. Choosing to pay more than the minimum as shown on the payment box could lead to substantial savings.
Using the example above making an extra $105 payment per month ($2671+105=$372), the credit card debt would be paid off in 3 years assuming you are not adding to the debt. That’s a total savings of $12,483 in interest.
Don’t use your credit card
That might sound drastic, but try it for a while and see how it goes. You make money each month, try to rely only on that if it’s possible. During this time don’t use your credit card and make regular payments to cut down on debt. By not accumulating more debt each month and making regular payments you will pay off your credit card debt faster.
Set realistic goals to pay off credit card debt
Due to the initial excitement of deciding to pay your credit card debt faster, you may end up setting some unrealistic goals that can crumble before your eyes. This can discourage you from continuing and you might abandon the process. Here financial planning comes in handy. Make compromises, but don’t promise to pay too much that you become frustrated and broke at the end of each month. Realistic goals have less pressure because you know they are achievable, you do only what you can.
Ask for help from friends and family or get a personal loan
If your family or friends can help you pay your credit card debt in full you can pay them back the money without interest so you’ll end up paying less. Another way would be to get a personal loan with a lower interest rate than that of your credit card. Use it to pay off the credit card in full and close it.
Achieving debt freedom is a long process that requires a lot of planning and persistence. Don’t shy away from asking for the help of a professional financial advisor for guidance if you’re having a difficult time.