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Smart Ways to Get Rid of Credit Card Debt

Credit cards can be a blessing or the death of you depending on how you use them, your spending habits, and ability to pay back.  If you are spending more than you are able to pay each month, you are noticing your balance start to rise and the interest payments start to kick in.  Before you sink further in the quick sand of debt, you will need to start coming up with a plan to come out debt-free on the other end.  It will take plenty of work, patience, and discipline going forward, but unless a change is made now, you will continue to sink further and further and less likely you will be able to get out.

Pay More than the Minimum

Depending on your balance, you probably have noticed that if you make the minimum payment you are seeing little of the principal balance going down and most going towards interest, and if you continue to only pay interest it could take decades to finally pay off.  The only way to get rid of that balance is to make larger payments where you can really do the most damage at chipping away at the principal and pay off a lot sooner than you would otherwise.  I realize that paying more towards your credit card will mean that other areas will suffer, so reducing unnecessary expenses would be a good place to start.

Put the Card Away

If your balance has start to get out of control it may be time to take a break and put the card away.  You can use your debit card/checking account to pay all of your monthly bills, and maybe you can start using cash to start making purchases, that way you can give yourself sort of an allowance for spending money and when it’s gone, that is all you get until the next paycheck.  It may be enough to give purchases a second though and see the value of a dollar a little more when you physically see the money leaving your hand and going into the cash register.

Reduce APR

Most credit cards will have a high APR, even approaching 16%, to have more incentive in paying the balance off by the statement due date, but when you can no longer do that, you are now being charged interest, and depending on the balance and APR, could be in the hundreds each month, so you can start by calling the lender to see if you can reduce the APR based on your payment history, every little bit helps.  If they will not budge, it may be time to apply for a new card elsewhere, perhaps checking with your bank/credit union first.

Take Advantage of a Balance Transfer

With all of the credit card competition out there, you could be getting offers left and right to transfer a balance over to their card.  This would work to your benefit if you can take advantage of a 0% APR promo rate, sometimes for a year, that you can really chip away at the balance without interest.  Keep in mind there is typically a transfer fee, sometimes up to 5%, which may be a big charge up front, but considering you would be skipping interest for a year, it could be worth it.

Take Out a Personal Loan

Sometimes transferring a balance to another card may not make sense for you as you are ready to have a payoff plan in plan and want the balance gone by a certain period.  You could look at taking out a personal loan, so that maybe it takes 5 years to be paid off, but at least it is set payments to make every month and there is an end in sight.  The interest on personal loans may not be that favorable, so you could even look at taking out a home equity loan as well, as rates may be better due to the collateral on your property.

Work on Your Credit Score

You may be having trouble finding a great offer to help you get out of your jam, and that may be due to your credit score.  In order to take advantage of the best market rates, your credit score really needs to be excellent, and your debt could be hindering that.  If you can curb spending and chip away at the balance, you will see your score start to rise each month, as long as you continue to make on-time payments and not take out additional debt.

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