Tips for Getting Out of Credit Card DebtRecent statistics show that 55% of people with credit cards carry a balance from month to month.
This means that they are paying less than the full amount that’s owed and often only the minimum amount due each month.
Unfortunately, this also means they’re paying interest on the money they borrowed so those items they purchased end up costing them much more than the retail price.
Once you get into credit card debt, it can be hard to get out.
These tips from the credit experts at Tayne Law Group, can help.
Know Your Interest RatesYou’d be surprised how many people take out credit cards and don’t know how much they’re paying in interest every month.
This is like buying items without looking at the price, which is something most people don’t do.
You should always be aware of how much you’re actually paying for things, especially if you’re purchasing them on credit.
Don’t think about the price that is on the product itself.
Think about how much it would be if you don’t pay the credit card off each month.
Some cards have extremely high interest rates, which can be a way that people with bad credit can start to build back their credit, but for most people, there are much better cards with much lower rates.
If you have a high-interest card with a balance and other cards with lower interest rates, pay off the high-interest rate card first.
Establish a budget for credit card payments, pay the minimum due on all cards and any money you have left over in your budget, put toward the high-interest balance.
Double the MinimumApproximately 11% of credit card holders pay only the minimum amount due every month.
This basically covers the interest on your account and does nothing for your principal balance.
In other words, making the minimum payment keeps you from falling behind on your debt, but it does nothing to eliminate it.
Doubling your minimum payment will make a huge impact on your debt because you’re paying the interest every month plus at least some on your principal.
This strategy not only lowers your credit card balance, but it also lowers the amount of interest you’re paying each month because the interest is calculated on the principal.
Lower the principal, lower your interest, lower your debt.
And if you can pay more than double, even if it’s less than the full balance, you’re still making more progress than you are if you only pay the minimum.
Make More PaymentsThere is no law that says you have to pay your credit card bills just once a month.
You can make as many payments as you want, as often as you want.
Even splitting your payment in half and paying it once at the beginning of the month and the other half at the end of the month will reduce the amount of interest you pay.
This is because your interest is calculated based on your average daily balance, so any time you can lower that balance, you’ll also be lowering your overall interest.
ConclusionCredit card debt can be a major life stressor, especially if you don’t have a plan for paying it off.
These tips, among other strategies, will help get your credit card debt better under control.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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