Many people carry revolving debt with their credit cards. Reducing debt can help one’s chances to be considered eligible for loans. The drawbacks associated with credit card debt require taking this issue seriously and adopting effective measures to pay off debt. Here are a few strategies to significantly reduce and even totally pay off credit card debt.
Use Your Credit Cards Wisely
Even if a person plans to spend wisely, plans may fall apart as soon as one encounters a tempting product or an alluring deal. This is why it may be effective to not carry credit cards except when necessary.
Make a list of all outstanding debts, such as car loans, mortgages, etc., and then prioritize their payments on the basis of interest rates. Concentrate on eliminating those debts with the highest interest rates. This will not only give you an idea of how much you owe, but also makes you more focused on which debts should be paid off the quickest.
Another effective practice towards paying off credit card debt is the reducing your expenditures. Although some expenses are unavoidable, there are a lot of others that can be avoided or delayed. Make a note of such expenses and spend accordingly.
Devise a Monthly Plan
A monthly budget listing all necessary expenses and avoiding the unimportant ones can significantly reduce credit card debt. A budget not only regulates upcoming expenses, but also motivates the eliminating of credit card debt.
Utilize Your Savings
Almost everyone keeps some reserved savings to cope with unanticipated circumstances. Savings can also be used to your benefit by paying off debt.
Consolidate Credit Card Debt
When you consolidate credit card debt, you combine multiple loans into one. This not only reduces the number of payments you have to make each month, it will also most likely give you a lower interest rate. Adopting debt consolidation and getting rid of higher interest rate loans can help a person be more focused towards a reduction of credit card debt. This is also an effective way to consolidate credit card debt.
Want to know more about paying off credit card debts? Check out this video from KIMT News 3, featuring Senior Member Service Representative Kim Ferraro.
Utilize Equity in Your House
Another approach for getting rid of credit card debts is using equity in a home. A person can utilize the equity in one’s house to secure a home equity loan. This can lower the effective interest rate you are paying and make it easier to pay down debt.
Contribute More to Monthly Payments
Credit card bills are typically paid every month. An attempt to pay a little more than the minimum payment can help reduce credit card debt quicker.
Liquidate Unneeded Items
Look around your home and take an inventory. There may be items that you are not using or that are luxuries, rather than necessities.
Manage the Money you Save With First Alliance Credit Union
Once you've paid off your credit card debt, don't be surprised if you have significant amount of money you don't have to spend each month. You might be tempted to spend it, but there are several other options available to you.
You can start planning for bigger expenses, such as education, new cars and even moving into a new home. You might also consider investing your money in an IRA or a CD. No matter what you do, though, the money you save will help to improve your quality of life.
If you're not sure what move to make, contact a First Alliance Money Navigator today. They will look over your finances with you and help you make the choice that's right for you, whether its getting a debt consolidation loan or transferring your balance.
Want more information? Download this episode of the Good Money Moves podcast covering paying off credit cards.